Two-thirds of retailers expect to close strong
Michigan retailers are looking forward to a robust holiday shopping season, according to the Michigan Retail Index, a joint project of Michigan Retailers Association and the Federal Reserve Bank of Chicago.
“Retailers expect a solid holiday shopping season,” MRA President and CEO James P. Hallan said. “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 or 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 the back-to-school sales season in August, retailers reported 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 held true. The NRF said it expected booming Halloween sales, with projections that Americans would splurge $9.1 billion on costumes, candy and pumpkins. 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 — 0.1 percent higher than 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.
William Strauss is senior economist and economic advisor with the Federal Reserve Bank of Chicago. He can be reached at (312) 322-8151.