For Immediate Release

January 25, 2006

LANSING — Michigan retailers see a slow start to the new year, following another lackluster holiday shopping season.

Only two of every five retailers expect to increase first quarter sales over the same period last year, according to the monthly Michigan Retail Index, a joint project of the Michigan Retailers Association (MRA) and Federal Reserve Bank of Chicago.

Retailers posted, on average, a 1.9 percent decline in holiday sales from the previous year, according to the monthly survey. Going into the season they had projected a 5-percent gain. Although December was the second best month of an overall slow year, it wasn’t enough to salvage the season for the average retailer.

For all of 2005, however, retailers increased sales by 2.8 percent. That was up slightly from 2.5 percent the year before.

“It’s easy to understand why many retailers are less than excited about the start of the new year,” said MRA Chairman and CEO Larry Meyer. “They experienced a slower than expected holiday season and don’t see much good economic news on the horizon.”

The Index found that 39 percent of retailers increased sales in December over the same month last year while 49 percent recorded declines and 12 percent saw no change. The results create a seasonally adjusted performance index of 47.7, up from 45.8 in November.

In addition, 40 percent believe their sales will increase for January–March, while 29 percent forecast declines and 31 percent project no change. The results create a seasonally adjusted outlook index of 60.9, down sharply from 73.9 in November.

The Michigan Retailers Association is the unified voice of retailing in Michigan and the nation’s largest state trade association of general merchandise retailers.

Note: William Strauss, Senior Economist and Economic Advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151.