State’s retail industry expects slow start to ’05

Coming off a mediocre holiday season, most Michigan retailers project a slow start to the new year.

According to the monthly Michigan Retail Index, a joint project of the Michigan Retailers Association (MRA) and Federal Reserve Bank of Chicago, a little more than a third of retailers expect to increase sales during the 1st Quarter compared to the same period last year.

Their forecasts follow a holiday season in which Michigan retailers’ average sales growth was just under 1 percent, far less than the 7-percent gain they had forecast back in September. For all of 2004, however, their average growth was a stronger 2.5 percent.

“The holiday season showed some life at the end, but it wasn’t enough to overcome the softness for most of the season,” said Larry Meyer, MRA chairman and CEO. “Understandably, retailers are cautious in their forecasts for the beginning of the new year. Michigan’s economic problems are still evident.”

Nationally, economists have pegged same-store holiday sales at between 2.5 and 3 percent.

The December Michigan Retail Index found that 37 percent of retailers increased sales over the same month last year, while 15 percent reported as-good sales and 48 percent recorded declines. The results create a seasonally adjusted performance index of 48.3, down from 48.9 in November.

Thirty-seven percent of retailers believe their sales will increase for January–March over the same period last year, while 39 percent project as-good sales and 24 percent predict sales will decline. The results create a seasonally adjusted outlook index of 62.0, down substantially from 80.4 in November.

Sales tax collections totaled $579 million in December, which was down 7.9 percent from the year-ago level. This decline followed a sharp increase of 23.7 percent in November.

Using a three-month moving average to smooth the monthly volatility in collections, the Senate Fiscal Agency found that total sales tax receipts were up 1.2 percent in December. So far in FY 2004-05, sales tax revenue is up 5.6 percent.

Complete results of this month’s Michigan Retail Index—including data on sales, inventory, prices, promotions and hiring—are available at www.retailers.com/news/retailindex.html. The website includes figures dating back to July 1994.

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