Consumer spending to remain tight in second half: Survey
Updated: 2009-07-04 08:17
By George Ng(HK Edition)
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HONG KONG: Retailers in the city are set to endure more hardship, for the next six months at least, as consumers are still reluctant to spend amid economic uncertainties, according to the latest survey by MasterCard.
It found that 58 percent of consumers said they plan to maintain the same level of discretionary spending in the next six months as the last six months.
Meanwhile, 32 percent of consumers plan to decrease their discretionary spending in the next six months.
Only 11 percent of respondents indicated that they plan to increase spending.
In terms of savings, 44 percent plan to save the same amount in the coming six months compared with the previous six months, while 24 percent plan to save more and 32 percent will save less.
Of those who said they were going to save the same as or more than they did in the past six months, 67 percent of respondents are saving for precautionary purposes, compared to 57 percent six months ago.
The increase in precautionary savings is due to the "very uncertain" economic outlook, MasterCard notes.
The survey on consumer purchasing priorities was conducted from March 23 to April 18.
Retailers in the city have been suffering from falling sales since the beginning of the year as the economic downturn increasingly weakens consumer confidence.
Retail sales in the city dropped 6.2 percent in May from a year ago, the fourth consecutive fall, as the swine flu epidemic compounded the negative impact of the economic slump, the government said on Thursday.
For the first five months, total retail sales fell 4.4 percent from a year ago.
Consumer confidence remains weak in Hong Kong, with the latest reading of about 30, far below the 50-threshold of growth and contraction despite a slight improvement compared with the previous period, according to a chart provided by the MasterCard survey report.
In sharp contrast, consumer confidence in the mainland continues to rise, with the latest reading at above 60.
Correspondingly, the majority of consumers in the mainland (70 percent) plan to maintain their level of discretionary spending in the next six months, the survey revealed.
Retail sales on the mainland surged 15.2 percent year-on-year in May, compared with a 14.8 percent rise in April and 14.7 percent jump in March, the National Bureau of Statistics of China reported earlier.
The MasterCard survey also offers some comfort to the local catering and entertainment sector.
It found 85 percent of consumer named dining and entertainment as their top spending priority for the six months ahead, up from 81 percent six months ago.
(HK Edition 07/04/2009 page2)