RETAIL SALES: Moderate growth
 Alongside less robust growth in inbound tourism, retail sales growth moderated in May and June after a long period of exceptionally strong performance. In volume terms, retail sales grew 5.6% and 4%, respectively, in May and June, compared to the year earlier.
Looking forward, slowing global economic growth, strains in the financial markets, elevated inflationary pressure and international commodity prices and consolidation in local asset prices are all likely to drag down the local economy and influence consumer sentiments. However, the stable labor market, together with further expansion of inbound tourism, should continue to provide support to the retail trade.
RETAINED IMPORTS OF GOODS: Growth seen
 Imports of capital goods attained some notable growth in May and June after declines in March and April. According to the latest Quarterly Business Tendency Survey results, large business establishments were still largely positive about their businesses despite the increasingly challenging external environment.
EXTERNAL TRADE: Total exports down slightly
 Total exports of goods fell slightly in June after relatively vibrant growth in April and May. This indicates that regional trade flows were hit by the slowdown among advanced economies. The value of total exports was 0.6% lower year-on-year. The external trading environment facing Hong Kong will grow increasingly challenging due to the expected moderation in global economic growth, lingering global financial turbulence and the negative effect of high commodity prices on Hong Kong’s major markets. The impact of the macroeconomic adjustment measures in the Mainland also needs to be watched closely.
PROPERTY: Market cools
The residential property market cooled somewhat in May and June after a robust performance during most of 2007 and the early months of 2008. Market sentiments apparently were dampened by dimmer global economic prospects and ongoing turbulence in the financial markets. The number of agreements for sale and purchase showed some rebound in June after the fourth consecutive month-to-month decrease in May, largely due to a couple of popular, large-scale developments at the upper end of the primary market. The volume of transactions in the secondary market, however, remained steady in May and June. Flat prices also remained largely stable in May and June, while rentals continued to edge up further.
LABOR MARKET: Unemployment rate at 3.3%
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Note: (*) Figures used are 3-month averages |
Conditions in the labor market remained stable, with a low unemployment rate and further increases in labor income. The seasonally adjusted unemployment rate for April - June remained at 3.3%, the lowest level in more than 10 years. Labor income continued to rise, as reflected in further increases in wage and payroll in the first quarter of 2008.
Consumer CPI: Inflation grew
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Note: (*) The underlying CCPI series has netted out the effects of the following relevant one-off measures so far: (a) Public housing rental waiver in February 2007; (b) Rates concession from April - September 2007; and (c) Rates concession from January 2008 to March 2009. |
Consumer price inflation, in terms of the year-on-year rate of change in the headline consumer price index, edged up further in May and June to 5.7% and 6.1%, respectively. While food prices remained elevated, pressure generated from the demand side was increasingly notable as shown in the faster increases in private housing rentals, and to a lesser extent, prices for other goods and services. The corresponding figures for the underlying inflation in May and June were the same as their headline counterpart, due to the offsetting effects of the rates concession in May and June and the same months in 2007.
Concerned about the impact of inflation on the community, particularly those with lower incomes and the underprivileged, the Hong Kong Special Administrative Region Government in July announced further relief measures on top of those already announced in the 2008-09 Budget. The new measures will include, among others, two extra months’ payment of Old Age Allowance, an extra month’s payment of CSSA and Disability Allowance, electricity charge subsidies for a further six months and waiving the employee retraining levy on foreign domestic helpers for two years. The government will also pay another two months’ rent for low-income families living in public housing estates.
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