HONG Kong's retail sales climbed more than economists expected as residents spent more and tourism increased.

Sales by value rose 14.2 percent in July from a year earlier to HK$21.3 billion (US$2.7 billion) after gaining 14.3 percent in June, the government said yesterday on its Website. That compared with the 12-percent median estimate of 11 economists surveyed by Bloomberg News.

Hong Kong's consumers are buying more clothes, electronics and jewelry as a tighter labor market improves job prospects and pushes wages higher. The city is benefiting from its role as a hub for the Chinese mainland, where economic growth was the fastest in 12 years in the second quarter.

"Retail sales expansion reflected a solid upward trend in domestic private consumption as well as a surge in mainland tourist arrivals," said Wang Qian, an economist at JPMorgan Chase & Co in Hong Kong.

Sales of jewelry, watches and clocks rose 26.1 percent in July from a year earlier, while clothing and shoe sales increased 15.9 percent. Sales of consumer durables gained 27 percent.

The jobless rate in the city of 6.9 million fell to 4.1 percent in July, the lowest level since May 1998, as companies increased hiring staff.