The Census and Statistics Department (C&SD) released the latest figures on retail sales July 3rd, 2007.

The value of total retail sales in May 2007, provisionally estimated at $20.5 billion, increased by 10.2% over a year earlier. After netting out the effect of price changes over the same period, the volume of total retail sales increased by 9.4% in May 2007 over a year earlier.

The revised estimate of the value of total retail sales in April 2007, at $19.2 billion, increased by 3.2% over April 2006, while the volume of total retail sales increased by 1.7%.

Taking the first five months of 2007 together, total retail sales increased by 8.3% in value or 6.2% in volume over the same period a year earlier.

Analysed by type of retail outlet and comparing May 2007 with May 2006. This was followed by sales of jewellery, watches and clocks (+21.8% in volume); wearing apparel (+11.8%); footwear, allied products and other clothing accessories (+9.0%); commodities in department stores (+8.6%); furniture and fixtures (+6.3%); miscellaneous consumer durable goods (+5.4%); miscellaneous consumer goods (+4.7%); and commodities in supermarkets(+4.3%).

Based on the seasonally adjusted series, the volume of total retail sales decreased by 2.6% in the three months ending May 2007 compared with the preceding three-month period.

These retail sales statistics are primarily intended to measure the sales receipts of goods sold by local retail establishments, for gauging the short-term business performance of the local retail sector. They cover consumer spending on goods but not on services.

Moreover, they include spending on goods by visitors in Hong Kong but not by Hong Kong residents outside Hong Kong. Hence they should not be regarded as a comprehensive indicator of overall consumer spending. In this context, it may be noted that the share of consumer spending on services in overall consumer spending has been increasing over time.

Users interested in the trend of overall consumer spending should refer to the quarterly series of private consumption expenditure (PCE), which is a major component of the Gross Domestic Product. Compiled from a wide range of data sources, PCE covers consumer spending on both goods (purchased from all channels) and services by Hong Kong residents whether domestically or abroad.

Commentary:
A Government spokesman said that the volume of total retail sales showed vibrant and broad-based growth in May, reflecting the generally upbeat consumer sentiment on the back of the favourable macroeconomic environment and also positive wealth effect from the buoyant stock market. The spokesman also pointed out that the strong pick-up in inbound tourism in May added further strength to retail sales in the month.

The spokesman believed that rising labour income and better job market should continue to uphold consumer sentiment. This, together with the further expansion of inbound tourism, would provide solid support to the retail business going forward.