Michigan Retailers Forecast Slower Start to '07

 | Source: Michigan Retailers Association Michigan Retailers Association

LANSING, MI--(Marketwire - December 27, 2006) - Despite a stronger start to the holiday shopping season, Michigan retailers appear less optimistic about the start of the new year, according to the latest Michigan Retail Index survey by the Michigan Retailers Association and Federal Reserve Bank of Chicago.

The sales performance component of the November index jumped nearly five points from last year and more than six points over October, indicating a solid beginning for holiday sales. But retailers' sales outlook for the next three months dropped nearly seven points from a month earlier and more than 11 points from a year ago.

December's Michigan Retail Index reporting sales for the entire holiday season will be available January 24. Retailers went into this season projecting, on average, a 4.5-percent gain.

"It's a long season, with many twists and turns, and it runs to the end of the year. But now we have data confirming it started well," said MRA Chairman and CEO Larry Meyer.

"It's also not surprising that retailers are tempering their outlook for the start of the new year, given economists' predictions that Michigan's economy won't improve in the immediate future."

The Index showed that 41 percent of retailers increased sales in November over the same month last year, while 43 percent recorded declines and 16 percent saw no change. The results create a seasonally adjusted performance index of 50.4, up from 44.2 in October.

In addition, 41 percent believe their sales will increase for December-February, while 34 percent forecast declines and 25 percent project no change. The results create a seasonally adjusted outlook index of 62.4, down from 69.3 in October.

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.

Michigan Retailers Association/Federal Reserve Bank of Chicago

Michigan Retail Index

November 2006 results

Index figures dating to July 1994 are available at www.retailers.com/news/retailindex.html


November Performance

Retailers reporting increased, decreased or unchanged sales, inventory, prices, promotions and hiring compared to the same month a year ago 

(numbers in parentheses indicate October results)

            % Increased  % Decreased  % No Change  Index*       Responses
Sales       41 (36)      43 (48)      16 (16)      50.4 (44.2)  207 (211)
Inventory   34 (36)      33 (28)      33 (36)      63.4 (50.2)  206 (208)
Prices      36 (35)      16 (10)      48 (55)      62.2 (64.0)  208 (208)
Promotions  31 (40)      12 ( 6)      57 (54)      58.8 (64.2)  208 (209)
Hiring       9 (15)      14 (10)      77 (75)      48.8 (52.5)  206 (210)


Outlook for Next 3 Months

Retailers expecting increased, decreased or unchanged sales, inventory, prices, promotions and hiring compared to the same period a year ago 

(numbers in parentheses indicate October results)

            % Increased  % Decreased  % No Change  Index*       Responses
Sales       41 (48)      34 (25)      25 (27)      62.4 (69.3)  205 (206)
Inventory   16 (27)      47 (41)      37 (32)      42.0 (59.7)  204 (204)
Prices      39 (35)      11 ( 7)      50 (58)      64.7 (63.4)  204 (206)
Promotions  30 (44)      19 ( 5)      51 (51)      60.3 (73.3)  204 (207)
Hiring      10 (13)      21 (13)      69 (74)      47.4 (50.8)  204 (206)


November Sales Performance & Outlook for Next 3 Months, by Region 

(the first number indicates sales performance for the month; the number in
 parentheses indicates outlook for the next three months)

            % Increased  % Decreased  % No Change
North       49 (42)      39 (37)      12 (21)
West        37 (37)      40 (29)      23 (34)
Central     41 (62)      41 (11)      18 (27)
East        33 (39)      39 (33)      28 (28)
Southeast   42 (33)      47 (40)      11 (27)


Question of the Month

Relative to last year, how are your margins on holiday merchandise this season? 

Larger          Smaller         Same
17.8%           31.1%           51%
*Seasonally adjusted diffusion index. A diffusion index, which is the sum of the percent of respondents indicating increase and half the percent indicating no change, is calculated and then seasonally adjusted using the U.S. Census Bureau's X-11 Seasonal Adjustment procedure. Index values above 50 generally indicate an increase in activity, while values below 50 indicate a decrease.

Contact Information: Contact: Tom Scott 517.372.5656 Email Contact

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