Retailers express confidence despite sluggish start
More than four of five Michigan retailers (82 percent) expect to increase 2017 sales over last year despite a slow start, according to the Michigan Retail Index, a joint project of Michigan Retailers Association and the Federal Reserve Bank of Chicago.
Only 7 percent expect their sales to decline and 11 percent see no change.
Taken together, retailers’ individual forecasts average a gain of 2.6 percent over last year. Last January, they predicted average sales growth of 2 percent for 2016. At year’s end, they reported annual results averaging a positive 0.5 percent.
“Retailers look at 2017 and see an economy growing more rapidly with more people working and spending money,” MRA President and CEO James P. Hallan said.
He noted “retail sales also started slowly last year but then built good momentum until falling off at the end.”
National Retail Federation economists predict U.S. retail sales will rise between 3.7 percent and 4.2 percent this year, excluding auto, gasoline and restaurant. Online and other non-store sales, which are included in the economists’ forecast, are expected to climb 8 percent to 12 percent.
The Michigan Retail Index survey for January found 29 percent of retailers increased sales over the same month last year, while 55 percent recorded declines and 16 percent reported no change. The results create a seasonally adjusted performance index of 40.5, down from 52.0 in December. A year ago in January, the performance index was 47.1.
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, 69 percent of retailers expect sales during February-April to increase over the same period last year, while 3 percent project a decrease and 28 percent no change. That puts the seasonally adjusted outlook index at 79.4, up from 65.3 in December. A year ago in January, the outlook index stood at 70.5.
William Strauss is senior economist and economic advisor with the Federal Reserve Bank of Chicago. He can be reached at (312) 322-8151.