SOURCE: Michigan Retailers Association

Michigan Retailers Association

February 18, 2016 14:02 ET

Retailers Project Modest 2016 Sales Growth

LANSING, MI--(Marketwired - February 18, 2016) - Despite a slow start in January, Michigan retailers are forecasting sales growth averaging 2 percent in 2016, according to the latest Michigan Retail Index survey, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.

More than two-thirds (69 percent) of retail businesses expect to increase their sales this year, while 17 percent project declines and 14 percent foresee flat sales.

About half of those expecting higher sales see them rising by more than five percent. Nearly two-thirds of those projecting decreases expect a fall-off of less than 5 percent.

Retailers reported earlier that sales for all of 2015 rose by an average of 0.8 percent.

"Retailers' forecasts are in line with economists' predictions of continued, measured growth in the economy," said MRA President and CEO James P. Hallan. "The positive economic conditions of lower unemployment and lower fuel prices continue to influence retail sales, but not by as much as anticipated."

Across the U.S., consumers' retail spending is forecast to grow 3.1 percent this year, according to the National Retail Federation.

The January Index survey found 36 percent of Michigan retailers increased sales over the same month last year, while 46 percent recorded declines and 18 percent reported no change. The results create a seasonally adjusted performance index of 47.1, down from 48.7 in December. A year ago January the performance index stood at 60.

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.

Looking forward, 62 percent of retailers expect sales during February-April to increase over the same period last year, while 15 percent project a decrease and 23 percent no change.

That puts the seasonally adjusted outlook index at 70.5, down from 71.0 in December. A year ago January, the outlook index stood at 76.2.

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
January 2016 results
Index figures dating to July 1994 are available at http://www.retailers.com/mra/news/michigan-retail-index.html

January 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 December results)

  % Increased % Decreased % No Change Index* Responses
Sales 36 (42) 46 (49) 18 (9) 47.1 (48.7) 67 (77)
Inventory 24 (35) 31 (31) 45 (34) 53.5 (56.6) 67 (77)
Prices 8 ( 3) 16 (10) 76 (87) 46.7 (47.3) 67 (77)
Promotions 18 (42) 6 ( 4) 76 (54) 61.0 (66.6) 67 (77)
Hiring 10 (11) 21 (10) 69 (79) 46.4 (51.4) 67 (77)

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 December results)

  % Increased % Decreased % No Change Index* Responses
Sales 62 (47) 15 (22) 23 (31) 70.5 (71.0) 66 (77)
Inventory 42 (28) 23 (26) 35 (46) 58.7 (58.7) 65 (76)
Prices 17 (19) 14 ( 8) 69 (73) 50.8 (55.6) 65 (77)
Promotions 52 (36) 3 ( 4) 45 (60) 73.3 (70.2) 66 (77)
Hiring 24 (17) 6 (13) 70 (70) 57.1 (54.3) 67 (77)

January 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 36 (55) 55 (27) 9 (18)
West 33 (67) 38 ( 9) 29 (24)
Central 67 (60) 16 (20) 17 (20)
East 20 (40) 60 (20) 20 (40)
Southeast 38 (67) 48 ( 9) 14 (24)

Question of the Month
How much do you expect your sales for 2016 to increase or decrease over last year?

Increase > 5%
  Increase 0-5%   No Change Decrease 0-5%   Decrease > 5%
  Average
34%   35%   14% 11%   11%   2.0%

*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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