More visitors, healthy economy driving growth

Hong Kong's retail sales surged 17.9 percent in November from a year earlier as more visitors arrived and the labor market continued to improve alongside the economic recovery, the government said Thursday.

The value of retail sales totaled HK$27 billion in November, up 17.9 percent from a year earlier, figures from a government report released Thursday show. In terms of volume, total retail sales jumped 15.2 percent compared with the same period last year after removing the effects of inflation.

For the first 11 months as a whole, total retail sales rose 18.2 percent in value and 15.5 percent by volume compared with 2009.

A stronger economy, an improving job market and robust inbound tourist numbers were all factors fuelling the sales growth.

"Retail sales remained robust in November, supported by the continued expansion of the economy, improvement in the labor market, and the sustained vibrant performance of inbound tourism," a government spokesman said in a statement.

The government earlier raised its full-year 2010 GDP growth forecast to 6.5 percent from 5-6 percent after the city's real GDP grew by a better-than-expected 6.8 percent in the third quarter compared with the same period last year.

As the economy expands, the labor market continues to improve, providing a strong boost to local residents' purchasing power.

"Better job prospects and salary increases helped support local spending," said Irina Fan, senior economist at Hang Seng Bank.

The jobless rate fell to a 23-month low of 4.1 percent for the three months ended November, while the number of jobless people dropped to 143,300 over the same period, the lowest level in almost two years, according to data released by the government.

And more importantly, the jobless rate may still trend down as businesses expand capacity and look for new hires to cope with new orders, which bodes well for domestic consumption going forward, Donna Kwok, an economist at HSBC Holdings Plc, said in a report also released Thursday reviewing the November sales figures.

"Consumer demand is expected to remain buoyant for some time yet," said Kwok. However, she cautioned that solid domestic demand may add to inflationary pressures in the coming months.

The latest retail sales figure was also a good sign in the eyes of the Hang Seng Bank's Fan, who referred to the firm internal demand as largely helping the business growth of the city's retailers.

Among other things, "the sales of durable goods, which are mostly purchased by local residents, reflect strong local spending," she added.

In volume terms, sales of consumer durable goods surged 82.6 percent in November from a year earlier, followed by sales of electrical goods, up 35.9 percent. Sales of jewelry, watches and other valuable gifts rose 26.1 percent.

Looking ahead, Fan expected even better growth for the retail business to continue into the first quarter of 2011.

"This is a spending season and the bonus season. Retail business is going to be very good from now to the first quarter of 2011," said Fan.

Around 3 million tourists visited Hong Kong in November alone, 17.1 percent more than during the same month last year.

China Daily

(HK Edition 12/31/2010 page3)