Retailers forecast modest sales growth in ’08

Most Michigan retailers believe the federal government’s plan to mail “economic stimulus” checks to taxpayers this spring will be of modest help to their businesses, according to the Michigan Retail Index, a joint project of Michigan Retailers Association and the Federal Reserve Bank of Chicago.

“Although a majority of retailers believe the tax rebates will provide some help, they don’t see rebates as the solution to current economic problems,” said James P. Hallan, MRA president and CEO. “They’re looking for modest sales growth in the latter half of the year, not the next few months.”

Michigan retailers project sales growth averaging 3.3 percent for 2008, after a slower start to the year. Their forecasts follow January and February sales that were below last year’s but better than those of December 2007.

For January, the Index showed 37 percent of retailers increased sales over the same month last year, while 46 percent recorded declines and 17 percent saw no change. For February, 29 percent of retailers increased sales over the same month last year, while 49 percent recorded declines and 22 percent saw no change.

The results create a seasonally adjusted performance index of 42.2 percent in February, down from 47.5 in January but still higher than December’s 38.5. Last year’s performance index was 46.9 in February and 50.4 in January.

Looking ahead, 39 percent believe their sales will increase for March-May, while 33 percent forecast declines and 28 percent project no change. The results create a seasonally adjusted outlook index of 50.0, down from 53.4 in January. A year ago February, the index was at 57.7.

February sales tax receipts totaled $498.7 million, which was up 6.2 percent from the year-ago level. This gain helped offset the 11.5-percent decline that occurred in January due to timing reasons. So far in the state’s FY 2007-08, sales tax revenue is up 3.1 percent.

Complete results of this month’s Michigan Retail Index—including data on sales, inventory, prices, promotions and hiring—are available at www.retailers.com/news/retailindex.html. The website includes figures dating back to July 1994.

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