Why the 2% shrinkage in 2Q13 private consumption was no surprise

Despite strong retail sales.

According to UBS, the sequential contraction in 2Q13 privation consumption (-2%q/qsa) was not a surprise because there is an element of growth give-back after the exceptional growth in 1Q13. 

Retail sales were strong in 2Q13, rising 14.7%y/y in value, driven largely by strong demand for gold sales on the back of gold price correction. 

Here's more from UBS:

Excluding gold and jewellery, retail sales were more subdued at 6.7%y/y. 

Private consumption accounts for 61% of Hong Kong’s gross domestic product and thus the economy tracks very closely with consumption. In particular, monthly retail sales often provide very important clues about the strength of GDP.

We expect private consumption to steadily trend up this year, as the domestic labour market remains tight; consumer sentiment improves a bit; and the tourists become more willing to spend. But absence any direct and significant stimulus (similar to the cash handouts in 2011), the cyclical rebound in consumption this year should prove modest.