Hong Kong’s retail sector continued its downward trajectory in August, as changing consumption patterns of residents and visitors, as well as a relatively strong Hong Kong dollar, weighed on consumption.

The provisional value of total retail sales dropped 10.1 percent year-on-year to HK$ 29.2 billion ($3.76 billion) in August, according to statistics from the Census and Statistics Department released on Thursday.

It was provisionally estimated that, for the first eight months of the year, the value of total retail sales was down by 7.7 percent compared with the same period last year.

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Online sales accounted for 8 percent of total retail sales in August, with a provisionally estimated value of HK$ 2.3 billion, representing a year-on-year decrease of 0.5 percent.

A notable decline in sales value was recorded in the sales of jewelry, watches and clocks, and valuable gifts, which fell by 24 percent year-on-year.

Sales of medicines and cosmetics bucked the overall downward trend. On a yearly basis, the sales value of this category of products rose 4.5 percent in August.

The decline in the value of total retail sales was attributed to a change in consumption patterns, the relatively strong Hong Kong dollar, and greater outbound travel by residents during the summer holidays, a government spokesperson said.

Although the retail sector will still face challenges in the near term, he said the central government’s preferential policies for Hong Kong as well as the city’s initiatives to boost market sentiment and fuel industry development will provide support to the industry.

An expected easing of the Hong Kong dollar exchange rate following the US interest rate cut will also benefit the retail sector, making tourists from the mainland and overseas more willing to spend in the city.

The spokesperson said that the Hong Kong Special Administrative Region government will continue to support small and medium-sized enterprises, including those in the retail sector, so as to assist enterprises in expanding their markets.

In a recent move to invigorate retailers, the Hong Kong Trade Development Council organized the inaugural Hong Kong Shopping Festival in August, which aims to help local enterprises increase brand awareness and grasp the business opportunities brought by the burgeoning e-commerce business on the Chinese mainland.

“The downturn in Hong Kong’s retail sector last month was affected by multiple factors, including a wave of Hong Kong residents ‘heading north’, outbound travel among local people and consumption downgrade of tourists,” Annie Tse Yau On-yee, chairwoman of the Hong Kong Retail Management Association, said. “The situation may continue in September.”

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She said that the US Federal rate cut and a recent surge in the stock market may reduce pessimism, but it will take time for the situation to change.

“Without external factors to shore up the retail market, we may see a low double-digit or high single-digit decline continue until the Lunar New Year period in 2025.”

Hong Kong saw nearly 4.5 million tourist arrivals in August, increasing 9.2 percent on a yearly basis, according to the Hong Kong Tourism Board. Of the total, 3.66 million came from the mainland, representing a 6.6 percent year-on-year rise.

Contact the writer at thor_wu@chinadailyhk.com