Retail sales momentum stalls
Rebounding retail sales hit a snag in May as Michigan’s retail industry posted sharply lower numbers, according to the latest Michigan Retail Index survey, a joint project of Michigan Retailers Association and the Federal Reserve Bank of Chicago.
May’s performance was the weakest since November and broke a string of three consecutive months above 50 on the 100-point index.
The drop coincided with an unexpected retrenchment by consumers across the nation. Excluding autos, U.S. retail sales fell by 1.1 percent, the largest month-to-month decline in 14 months, according to the U.S. Commerce Department. Analysts had predicted a small gain.
We expected to see continued improvement here, because the state’s unemployment rate dropped in May and because retailers were up against some weak sales numbers from a year ago. But it appears that national economic issues, including a sharp drop in home sales, were a major drag against consumer spending.
The Michigan Retail Index survey for May found that 39 percent of retailers increased sales over the same month last year, while 45 percent recorded declines and 16 percent saw no change. The results create a seasonally adjusted performance index of 42.4, down from 57.9 in April.
Index values below 50 generally indicate a decrease in overall retail activity.
Looking ahead, 49 percent of retailers expect sales during June-August to improve over the same period last year, while 20 percent project a decrease and 31 percent expect no change. That puts the seasonally adjusted outlook index at 62.3, down from 74.3 in April.
Northern Michigan retailers fared the best; 52 percent had increased year-to-year sales.
James P. Hallan is CEO of the Michigan Retailers Association, the nation’s largest trade association of general merchandise retailers.