Hong Kong's retail sales fell for the 14th consecutive month in April, plunging 7.5 percent from a year ago. April was slightly less severe than a revised estimate of a 9.8 percent YoY contraction in March.
April sales of jewellery, watches, clocks and valuable gifts fell 16.6 percent in value terms, a 20th consecutive month of decline, while durable consumer goods fell the most at 31.6 percent, followed by electronics and photographic equipment which fell 23 percent. Consumers seem to be drinking more alcohol and buying more groceries however, as supermarket sales and alcoholic drinks and tobacco were up 2.4 percent and 5 percent respectively.
The slowing economy in mainland China continues to have a significant impact, as tourists from mainland China, which make up 73.8 percent of the total, fell 4 percent from the prior year.
"Many types of retail outlet still recorded notable falls in sales, reflecting the continued drag from the slowdown in inbound tourism as well as the more cautious local consumer sentiment amid subpar economic conditions," the government said in a statement.
Hong Kong is struggling with mounting economic challenges from the prospect of rising U.S. interest rates, which has stepped up capital outflows, and from China's economic slowdown.
Mainland tourists are avoiding the city amid political tensions with China and growing calls from radical activists for greater autonomy from Beijing.
"The near-term outlook for retail sales will continue to depend on the performance of inbound tourism," the government added.
With China's manufacturing PMI contracting for a 14th straight month in April as well, the difficult times that Hong Kong is experiencing don't look to be ending any time soon. Also, as we have discussed many times and as Reuters mentions above, as the Fed discusses further rate hikes, fears of a significant currency devaluation have sparked capital outflows, which will also continue to hurt Hong Kong.