Michigan Retailers forecast smaller holiday gains

For Immediate Release

October 24, 2007

LANSING — Most Michigan retailers are projecting sales gains for the upcoming holiday shopping season, but the increases are some of the smallest on record, according to the Michigan Retail Index, a joint project of the Michigan Retailers Association (MRA) and Federal Reserve Bank of Chicago.

Their forecasts follow disappointing September sales, after four months of generally positive performance by the state’s overall retail industry.

Fifty-two percent see their holiday sales rising, with overall growth averaging 2.2 per cent above last year. That’s the most subdued prediction since the Index was established in 1994. Last year’s forecast was 4.5 percent, although less than 40 percent hit it.

The National Retail Federation is forecasting modest holiday gains across the U.S. It predicts sales will rise 4 percent—the smallest increase since 2002’s 1.3 percent.

“Fall sales have been hurt by warm weather, uncertainty over auto contract negotiations and state budget talks, and general economic challenges,” said MRA Chairman and CEO Larry Meyer. “But given the momentum of recent months, most retailers are looking forward to a positive, although subdued, holiday season.”

The Michigan Retail Index for September showed that 35 percent increased sales over the same month last year, while 47 percent recorded declines and 16 percent saw no change. The results create a seasonally adjusted performance index of 46.5, down from 52.4 in August.

Fifty-two percent believe their sales will increase for the 4th Quarter over the same period last year, while 27 percent say sales will decline and 17 percent expect no change. The results create a seasonally adjusted outlook index of 62.2, down from 65.2 in August.

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.