SOURCE: Michigan Retailers Association

Michigan Retailers Association

October 26, 2017 12:04 ET

Retailers optimistic about holiday sales season

LANSING, MI--(Marketwired - October 26, 2017) - Michigan retailers say they're looking forward to a robust holiday shopping season, according to the Michigan Retail Index, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.

"Retailers expect a solid holiday shopping season," said MRA President and CEO James P. Hallan. "Our survey with the Federal Reserve Bank shows that 60 percent expect an increase in sales over last year."

In this month's survey, retailers were asked, "Compared to last year, what is your sales projection for this year's holiday season?" The results are promising:

  • 19 percent expect sales increases of 6 percent of more
  • 41 percent expect sales increases of 1 percent to 5 percent
  • 28 percent expect no change
  • 7 percent expect a decrease of 0 to 5 percent
  • 6 percent expect a decrease of 6 percent or more

Coming off back-to-school sales season in August, retailers reported that their sales dipped in September. Thirty-nine percent posted sales increases in September over August, but that number leaps to 67 percent when asked if they expect sales activity to increase in the next three months.

October could be one of the reasons for an uptick if the National Retail Federation's prediction for Halloween sales holds true. The NRF says it expects booming Halloween sales, with projections that Americans will splurge $9.1 billion on costumes, candy and pumpkins this fall. That's up 8.3 percent ($8.4 billion) from last year.

Meanwhile, Michigan's unemployment rate went from 3.9 percent to 4.3 percent in September, compared to the U.S. unemployment rate of 4.2 percent. But sales tax receipts remain a good news story for Michigan, after 2016 receipts were flat.

Sales tax receipts totaled $699 million in September, $66.3 million above the monthly forecast and up 8.3 percent from September 2016, according to the state Senate Fiscal Agency. Sales taxes from auto sales were down 3.3 percent from September 2016, but year-to-date sales tax collections are 7.3 percent above the 2016 level, and $139.5 million above forecast.

The Michigan Retail Index's September survey found that while 39 percent reported sales increases over August, 50 percent recorded declines and 11 percent reported no change. The results create a seasonally adjusted performance index of 43.7.

The 100-point index gauges the performance of the state's overall retail industry, based on monthly surveys conducted by MRA and the Federal Reserve Bank of Chicago's Detroit branch. Index values above 50 generally indicate positive activity; the higher the number, the stronger the activity.

While 67 percent of Michigan retailers expect sales during October-December to increase,16 percent predict a decrease and 17 percent no change. That puts the seasonally adjusted outlook index at 75.7, according to the Retail Index survey, revealing retailers' optimism.

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

September 2017 results

September performance

Retailers reporting increased, decreased or unchanged sales, inventory, prices, promotions and hiring compared to last month (numbers in parentheses indicate August results). Survey respondents: 56.

  % Increased % Decreased % No Change Index*
Sales 39 (54) 50 (33) 11 (13) 43.7 (66.5)
Inventory 28 (38) 18 (23) 54 (39) 54.2 (59.6)
Prices 9 (13) 7 ( 5) 84 (82) 49.4 (52.6)
Promotions 16 (18) 9 (11) 75 (71) 55.3 (55.4)
Hiring 14 (15) 14 (18) 72 (67) 47.3 (48.8)

Outlook for the next three months

Retailers expecting increased, decreased or unchanged sales, inventory, prices, promotions and hiring compared to last month (numbers in parentheses indicate July results)

  % Increased % Decreased % No Change Index*
Sales 67 (66) 16 (13) 17 (21) 75.7 (76.6)
Inventory 41 (41) 30 (23) 29 (36) 57.6 (59.9)
Prices 18 (10) 5 ( 3) 77 (87) 57.3 (53.4)
Promotions 42 (49) 5 ( 8) 53 (43) 66.4 (67.6)
Hiring 31 (20) 13 (18) 56 (62) 59.3 (50.9)

September sales performance and outlook for the next three 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 33 ( 80) 67 (20) 0 ( 0)
West 39 ( 50) 39 (33) 22 (17)
Central 40 ( 80) 40 ( 0) 20 (20)
East 33 ( 33) 67 (33) 0 (34)
Southeast 39 (78) 57 ( 4) 4 (18)

*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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