2nd Quarter looking less healthy for retailers

Michigan retailers have tempered their outlook for 2nd Quarter sales after a slow March.

March’s Michigan Retail Index, a survey project of the Michigan Retailers Association (MRA) and Federal Reserve Bank of Chicago, found the biggest drop in short-term sales forecasts in the past four months. The industry’s overall sales performance for the month also fell, the second consecutive month of decline.

“A late Easter, higher interest rates and Michigan’s struggling economy all contributed to the sales fall-off in March,” said MRA Chairman and CEO Larry Meyer. “All those factors, plus the specter of gasoline topping $3 a gallon by summer, are no doubt cutting into retailers’ previous projections for short-term sales.”

The Index found that 36 percent of retailers increased sales in March over the same month last year while 48 percent recorded declines and 16 percent saw no change. The results create a seasonally adjusted performance index of 42.0, down from 47.5 in February and 54.3 in January.

In addition, 57 percent believe their sales will increase for April–June, while 17 percent forecast declines and 26 percent project no change. The results create a seasonally adjusted outlook index of 63.2, down sharply from 72.0 in February.

Northern Michigan retailers posted the best overall March performance, with 48 percent ringing up higher sales. Central Michigan retailers were the most optimistic, with 71 percent forecasting short-term gains.

Sales tax collections totaled $523.2 million in March, representing a 1.7-percent increase from last year. This increase in March marked the eighth time in the past 12 months that sales tax collections posted an increase from the previous year’s level.

Excluding sales tax collections from motor vehicles, sales tax collections posted an increase of 3.7 percent in March. Some of this increase is due to record-high gasoline prices.

So far in FY 2005-06, sales tax collections are ahead of last year’s pace by a slight 0.3 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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