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Retailers project modest sales growth for rest of this year
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 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 5 percent. Nearly two-thirds of those projecting decreases expect a fall-off of less than 5 percent, according to the survey numbers.
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, which is down from 71.0 in December. A year ago January, the outlook index stood at 76.2.
William Strauss is senior economist and economic advisor with the Federal Reserve Bank of Chicago. He can be reached at (312) 322-8151.