SOURCE: Michigan Retailers Association

Michigan Retailers Association

April 27, 2011 11:17 ET

Michigan Retailers Say Gas Prices, Weather Hit Retail Sales

LANSING, MI--(Marketwire - Apr 27, 2011) - Michigan retailers are worried about rising gasoline prices. Sharply higher pump prices, together with cool weather and a late Easter, drove down March sales and future sales projections, according to the latest Michigan Retail Index survey conducted by Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.

The retail industry's March sales performance dipped to its lowest level since last July and its optimism slipped to the lowest since last September.

"With gasoline prices more than $1 per gallon higher than last year, it should come as no surprise that retailers are concerned," said James P. Hallan, MRA president and chief executive officer. "In fact, rising prices at the pump did cut into March sales."

MRA members' comments from the survey included: "Gasoline prices are hitting that uncomfortable mark [again]," and, "The high price of gas and diesel is putting brakes on this recovery."

Other comments ranged from, "The weather so far has not been too cooperative," to "Weather really hurt, and late Easter also hurt March sales."

The Michigan Retail Index for March found that 32 percent of retailers increased sales over the same month last year, while 39 percent recorded declines and 29 percent saw no change. The results create a seasonally adjusted performance index of 42.9, down from 55.2 in February and 53.3 in January.

Index values below 50 generally indicate a decrease in overall retail activity.

Looking forward, 54 percent of retailers expect sales during the 2nd Quarter to increase over the same period last year, while 14 percent project a decrease and 32 percent no change. That puts the seasonally adjusted outlook index at 63.8, down from 72.3 in both February and January.

Note: William Strauss, Senior Economist and Economic Advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151.

Michigan Retail Index
March 2011 results
Index figures dating to July 1994 are available at http://www.retailers.com/mra/news/michigan-retail-index.html

March 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 February results)

% Increased% Decreased% No ChangeIndex*Responses
Sales32 (43)39 (35)29 (22)42.9 (55.2)114 (110)
Inventory31 (28)19 (30)50 (42)55.5 (50.2)114 (109)
Prices40 (29)5 (7)55 (64)69.6 (60.9)114 (109)
Promotions23 (30)5 (5)72 (65)58.7 (63.8)114 (108)
Hiring10 (3)9 (9)81 (88)49.2 (48.3)112 (109)

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 February results)

% Increased% Decreased% No ChangeIndex*Responses
Sales54 (62)14 (9)32 (29)63.8 (72.3)115 (109)
Inventory34 (34)13 (17)53 (49)55.2 (53.9)113 (108)
Prices41 (37)4 (6)55 (57)68.2 (64.5)113 (108)
Promotions36 (39)2 (2)62 (59)65.3(66.0)113 (107)
Hiring15 (9)6 (8)79 (83)51.4 (49.9)111 (105)

March 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
North20 (63)73 (12)7 (25)
West26 (55)29 (16)45 (29)
Central47 (60)26 (7)27 (33)
East36 (18)18 (18)46 (64)
Southeast35 (58)55 (16)10 (26)

*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.

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