LANSING – A look-alike February and March temperature-wise kept sales stagnant in March, but wage growth will likely translate into increased sales this spring.
The monthly Retail Index survey came in at 42.6, a decrease from March 2018’s 64.3. February 2019’s survey came in at 42.8. The seasonally adjusted performance index is conducted by Michigan Retailers Association (MRA) in cooperation with the Federal Reserve Bank of Chicago’s Detroit branch.
In addition to the weather, “It’s also important to remember that the economy typically slows down in the first quarter,” said James P. Hallan, MRA President and CEO.
The 100-point index provides a snapshot of the state’s overall retail industry. Index values above 50 generally indicate positive activity; the higher the number, the stronger the activity.
The March survey showed that 33 percent of respondents reported sales increases over February. Forty-seven percent of retailers recorded declines in March and 20 percent reported no change.
The Retail Index shows that 64 percent of Michigan retailers expect strong sales through June, while 10 percent predict a decrease; 26 percent expect no change. That results in an adjusted outlook index of 71.0 – a strong prediction as stores head into summer.
One major cause for optimism is the Labor Department’s report that average hourly earnings in March were up 4 cents over February to $27.70, a year-over-year increase of 3.2 percent that builds on a 10-cent gain seen in February.
“That kind of wage growth is encouraging to retailers,” Hallan said. “Higher wages mean increased spending. As the economy picks up, so will retail sales and new jobs.”
The National Retail Federation released an estimation on Mother’s Day spending earlier this week. Spending is expected to reach a record $25 billon this year. That’s up from $23.5 billion in 2018. Those celebrating the mothers and women in their lives are projected to spend an average of $196.
The most popular gift category for Mother’s Day spenders is greeting cards; NRF expects consumers to spend $843 million on them.
The unemployment rate in Michigan once again remained at 4.0 percent in March 2019, while the national rate remained at 3.8 percent. In March 2018, Michigan’s unemployment rate was 4.4 percent.
The state Senate Fiscal Agency showed that March 2019 sales tax receipts improved 7.7 percent over March 2018, but were $53.5 million below the forecasted level.
Note: William Strauss, senior economist and economic advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151.