Strong January spending keeps retail sales up by 6.6%

Clothing and footwear sales are largely improved.

According to Barclays, January/February combined y/y Hong Kong retail sales growth normalised after a strong January (that was boosted by Chinese New Year timing difference), as anticipated.

Jan/Feb y/y growth was back at just +6.6% y/y by value, similar to the monthly readings in 2H13 that only saw mid-high single-digit % y/y growth, and slightly better than December 2013 that saw +5.7% y/y growth.

Here’s more from Barclays:

February growth was negative at a 2.3% y/y decline, after a strong January that was +14.4% y/y; Bloomberg consensus was looking for +4.5% y/y growth. Volume growth for Jan/Feb combined was at +7.9% y/y.

Mainland visitor arrival growth in February continued at +10% y/y. Jan/Feb combined y/y growth was at +17% y/y, which is much better than 4Q13, which was just +11% y/y.

For Jan/Feb combined, both overnight and same-day visitor arrivals were at +17% y/y. The acceleration in growth seen in Jan/Feb, however, did not bring a significant acceleration in discretionary segments’ retail sales growth rates; which we believe could be due to less growth in expenditure per visitor.

For Jan/Feb, department stores saw +8.5% y/y growth, similar to December that saw +8.8% y/y growth.

Clothing and footwear sales growth improved and accelerated to +9.2 y/y in Jan/Feb vs. +5.8% y/y in December.

Growth of jewellery and watches segment was slower at just +5.3% y/y, which is slower than the high- single-digit % growth seen in 4Q13.

Jan/Feb cosmetics and medicines sales growth was just +5.3% y/y, which is a further weakening compared to 4Q13 growth of a high single digit % y/y.

For Jan/Feb combined, food, alcohol and tobacco retail sales were +6.4% y/y, similar to the December and 4Q13 growth trends. Consumer durables were +5.5% y/y, which is an improvement from 4Q13 growth trends.