Hong Kong Aug retail sales fall for 18th month, 'Golden Week' seen gloomy

Hong Kong Aug retail sales fall for 18th month, 'Golden Week' seen gloomy

HONG KONG, Sept 30 (Reuters) - Hong Kong's retail sales fell for the 18th straight month in August, hit by a drop in big-spending mainland Chinese visitors and weak consumer spending at home amid an uncertain economic outlook.

Retail sales slid 10.5 percent from a year earlier to HK$33.9 billion ($4.4 billion) in value terms, after a 7.7 percent decline in July.

In volume terms, August sales dropped 12.7 percent on-year, government data showed on Friday.

China's economic slowdown and a strong Hong Kong dollar has crimped business activity and tourism in Hong Kong.

Once a favourite shopping destination for mainland Chinese, those tourists are now heading to other cities, including Japan and South Korea, which offer cheaper travel options.

"The near-term outlook for retail sales will still hinge on the performance of inbound tourism," the Hong Kong government said in a statement.

Hong Kong tourist arrivals in August fell 9.4 percent from a year earlier to 5.09 million. They had risen 2.6 percent in July, the first gain after 13 months of decline.

Mainland visitors, who account for 79.4 percent of the total, fell 11.3 percent to 4.04 million in August after a 2.2 percent rise in July. (http://bit.ly/2djCzwF)

The surprise drop in visitor numbers has dampened hopes of a turnaround in the tourism and retail sectors during China's week-long National Day Golden Week holiday beginning on Saturday.

Paul Leung, chairman of the Hong Kong Inbound Travel Association, said the city received about 300 tours a day during the Golden Week holiday in the same period last year.

"In view of the current situation, a drop of 30 percent (from a year back) is not surprising," Leung said, adding that Japan, South Korea and Southeast Asia were top destinations for Chinese tourists.

Hong Kong is facing mounting economic challenges at a time when its currency is strong. Hong Kong's peg to the U.S. dollar means it is prone to strengthen when other Asian currencies weaken.

In addition, uncertainty due to Britain's vote to leave the European Union is expected to weaken European currencies, making Hong Kong an even more expensive destination.

Sales of jewellery, watches, clocks and valuable gifts in August fell 26.6 percent in value terms, the 24th consecutive month of decline. Department store sales slid 10.7 percent on the year. ($1 = 7.7535 Hong Kong dollars) (Reporting by Donny Kwok; Editing by Kim Coghill)

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