HONG KONG Hong Kong's June retail sales rose 19.6% from a year earlier in the seventh consecutive month of growth thanks to a tourism recovery and positive consumption sentiment and the outlook is favourable, the city government said on Tuesday.

Sales increased to HK$33.1 billion ($4.25 billion). That compared with a revised 18.5% rise in May and 14.9% growth in April.

The government launched a promotional campaign in March called "Hello Hong Kong" after lifting all strict COVID-19 restrictions in the city, to bring back tourists and businesses. It launched a "Happy Hong Kong" campaign in late May to boost local spending and the economy.

"The outlook for retail sales remained favourable," a government spokesperson said, adding that visitor arrivals should increase, while an improved labour market and government measures to boost the recovery should render support to consumption demand.

In volume terms, retail sales increased 17.5% year-on-year in June. That compared with a revised 16.6% growth in May and 13.1% growth in April.

The Hong Kong Retail Management Association launched "Happy Hong Kong Shopping Festival" from July 1 to Aug. 31 with about 6,000 stores offering discounts and other retail promotions to boost consumption.

However, the city's economic growth slowed to 1.5% in the second quarter from a year earlier, and compared with 2.9% growth in the previous quarter. The government has maintained an economic growth forecast of between 3.5% and 5.5% for 2023.

Preliminary visitor arrivals for June were 2.75 million, bringing the total for the first half of 2023 to 12.88 million visitors, according to Hong Kong Tourism Board data, compared with 76,004 in the January-June period in 2022 and 41,112 in June last year.

Among the arrivals, the number of mainland Chinese visitors eased slightly to 2.16 million in June from 2.29 million in May, the tourism data showed. That compared with 35,348 mainland visitors in June last year.

Financial Secretary Paul Chan said on Sunday the consumption patterns of residents and tourists had changed after three years of pandemic curbs.

Not only have residents reduced their spending at night, but Hong Kong people's consumption in the mainland, such as the nearby city of Shenzhen, had increased significantly because of smoother cross-border travel and emerging tourist attractions, Chan wrote in a blog.

"We need more distinctive and creative marketing strategies and activities, better products and services, create new growth points for consumption," Chan said, adding that he had full confidence in the development of Hong Kong in the medium and long term.

In June, sales of jewellery, watches, clocks and valuable gifts, which before the pandemic were mostly to mainland tourists, surged 64.3% from a year earlier as compared with a 51.8% jump in May, data showed.

($1 = 7.7926 Hong Kong dollars)

(Reporting by Donny Kwok and Twinnie Siu; Editing by Robert Birsel)