Hong Kong retail sales remained weak in December, even as the overall rate of decline improved from the previous month.

Retail sales of jewelry, watches, clocks and valuable gifts decreased 3% year on year to HKD 3.71 billion ($473.5 million) for the month, the municipality’s Census and Statistics Department reported Friday. However, the overall figure was an improvement on November’s 8% decrease, as the government began to ease travel restrictions and social-distancing measures toward the end of the month. Sales across all retail categories rose 1.1% to HKD 33.66 billion ($4.3 billion).

“The value of total retail sales reverted to a year-on-year increase…in December alongside improved economic sentiment and the further relaxation of social-distancing measures,” a government spokesperson said. “For the fourth quarter as a whole, there was a small increase of 0.4%. Yet, reflecting the severe impact of the fifth wave of the local epidemic in early 2022, the value of total retail sales fell mildly…for the year as a whole.”

Hard-luxury sales gained 0.3% for the full year to HKD 38.89 billion ($4.96 billion) in 2022, while annual sales in all retail categories fell 0.9% to 349.93 billion ($44.66 billion).

Hong Kong retail sales rely strongly on purchases from overseas visitors, primarily from China. However, tourism in the region has been halted due to quarantine and travel restrictions related to Covid-19. On January 8, 2023, China lifted its quarantine requirement for inbound travelers. Meanwhile, Hong Kong removed its restrictions at the end of December. In the last month of the year, the number of visitors to Hong Kong jumped to 160,578 compared to 9,448 during the same period in 2021.

“Looking ahead, the return of economic activities from the epidemic to normalcy and an expected increase in inbound visitors should bode well for retail sales performance,” the spokesperson added. “Improved labor-market conditions will provide further support.”

Image: The Mong kok shopping district in Hong Kong. (Shutterstock)