(Reuters) - Hong Kong's retail sales rose in January for the second consecutive month as consumer sentiment improved, with further relaxation of pandemic-related rules expected to provide an additional boost, the government said on Thursday.
January retail sales grew 7% from a year earlier in value terms to stand at HK$36.2 billion ($4.61 billion). That compared with HK$33.7 billion in December, when retail sales were revised to an increase of 1.2% from a year earlier.
Strict COVID-19 restrictions have weighed on Hong Kong's economy since early 2020, grinding tourism to a halt and battering sales at bars, restaurants and shops.
The city dropped its COVID-19 mask mandate from March 1 in a move to lure back visitors and restore normal life more than three years after stringent rules were first imposed in the financial hub.
The government also launched a promotional campaign earlier this month called "Hello Hong Kong" to bring back tourists and businesses.
"The continued return of economic activities to normalcy and further rebound in the number of visitor arrivals will benefit the retail sector," a government spokesperson said, adding that improved labour market conditions will provide support.
In volume terms, retail sales in January increased 5.1% from a year earlier. That compared with a revised 0.6% fall in December.
The January retail sales value and volume were the highest since April 2022 when it was up 11.7% and 8%, respectively.
Hong Kong has been battered by its own pandemic measures and spillover from China's zero-COVID policies, but recovering consumer spending on the mainland and a rebound in travel are expected to help the city's economy this year.
The Asian financial hub's economy is expected to grow 3.5%-5.5% this year after shrinking 3.5% in 2022.
Tourist arrivals in Hong Kong in January soared nearly 70 times from a year earlier to 498,689. That compared with about 16 times growth in December to 160,578.
The city's seasonally adjusted unemployment rate eased to 3.4% in the November to January period, from 3.5% in the October to December period.
In January, sales of jewellery, watches, clocks and valuable gifts, which before the pandemic were mostly to tourists from mainland China, jumped 23.1% from a year earlier, following a 4.9% decline in December, data showed.
Sales of clothing, footwear and accessories in January grew 14.7% on the year after a 0.9% increase in December.
Online retail sales in January decreased 4.2% year-on-year in value terms, compared with a 12.8% growth in December.
($1 = 7.8496 Hong Kong dollars)