Retail performance index jumps more than 20 percent
Michigan retailers say their sales rose during October compared to September numbers, according to the Michigan Retail Index, a joint project of Michigan Retailers Association and the Federal Reserve Bank of Chicago.
This comes on the heels of initial reports that holiday online sales over the Thanksgiving weekend could break records, while brick-and-mortar stores held their own.
“All signs are good for a great holiday shopping season,” MRA President and CEO James P. Hallan said. “People have disposable income, and the economy is chugging along. With an extra shopping day this year and Christmas scheduled to fall on a Monday, consumers will have more chances than usual to get their shopping done. Now, we just need the weather to cooperate.”
Fifty-seven percent of retailers reported their sales increased in October over September. Fifty-five percent said they expect sales activity to increase in the next three months. That observation came well before initial reports of robust sales over the Thanksgiving weekend — with Black Friday, Small Business Saturday and Cyber Monday.
Likely reasons for the October sales boost: The National Retail Federation predicted Halloween sales would increase 8.3 percent to $9.1 billion in October. Also, the NRF said many consumers are starting to do their holiday shopping in late October.
Meanwhile, Michigan’s unemployment rate went from 4.3 percent to 4.5 percent in October, compared to the U.S. unemployment rate of 4.7 percent.
Sales tax receipts totaled $683.2 million in October, up 10.3 percent from a year ago and representing the second time in the past four months that sales tax collections have exhibited double-digit, year-over-year growth. Sales tax collections from motor vehicle sales were 8.7 percent above the October 2016 level; collections from non-vehicle sales were up 10.5 percent. Year-to-date sales tax collections were 7.6 percent above the level a year ago and $145.2 million more than projected.
The Michigan Retail Index’s October survey found that while 57 percent reported sales increases over September, 30 percent recorded declines and 13 percent reported no change. The results create a seasonally adjusted performance index of 65.9, up from the September 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 55 percent of Michigan retailers expect sales during November-January to increase, 16 percent predict a decrease and 29 percent predict no change. That keeps the seasonally adjusted outlook index at 75.7, according to the Retail Index survey, continuing 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.