Retailers' forecasts cool as sales remain flat

Michigan retailers’ optimism is cooling slightly as sales continue on the chilly side.

Retailers’ short-term projections fell in April after holding steady the first three months of the year, according to the Michigan Retail Index, a joint project of the Michigan Retailers Association (MRA) and Federal Reserve Bank of Chicago. The retail industry’s sales performance remained subpar for the sixth consecutive month.

The April Index found that 56 percent of retailers believe their sales will increase for May–July over the same period last year, while 32 percent expect as-good sales and 12 percent predict sales will decline. The results create a seasonally adjusted outlook index of 67.1, down from 69.9 in March.

The Index also found that 41 percent of retailers increased sales over April ’04, while 11 percent reported as-good sales and 48 percent recorded declines. The results create a seasonally adjusted performance index of 41.6, down from 44.1 in March. October 2004 was the last time the index topped the 50 mark and indicated positive overall activity for the retail industry.

“The majority of Michigan retailers continue to struggle, with sales lagging behind last year,” said Larry Meyer, MRA chairman and CEO. “It’s not surprising, then, that we’re seeing a small decline in their short-term outlook.”

Furniture and appliance stores led the industry, with 50 percent ringing up increased year-to-year sales. Apparel followed, with 45 percent recording better sales.

Sales tax collections totaled $478.0 million in April, which was 7.4 percent below last year’s level. According to the Senate Fiscal Agency, most of the decrease was due to the weekend effect (April ended on a weekend, so some of the sales tax revenue from April spilled over into May).

Another reason was the continued decline in motor vehicle sales. In April, sales tax receipts derived from motor vehicle transactions were down 12.7 percent from last year. Sales tax collections from all other taxable retail transactions were down 6.5 percent. So far in FY 2004-05, total sales tax collections are up 2.8 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

Return to June Michigan Retailer Page one • MRA home