Michigan Retail Sales Inch Up in May

Michigan retailers' sales rose slightly in May, stopping a two-month decline, according to the Michigan Retail Index, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.

Retailers grew more cautious in their outlook for summer, however, breaking a five-month streak of rising projections.

"The good news is that sales stopped sliding after two months of decline and can begin to generate some positive momentum," said MRA President and CEO James P. Hallan. "We have a long way to go, but it's important to see the numbers starting to move in the right direction."

Nationally, retail sales also rose in May, according to the U.S. Commerce Department. It attributed much of the increase to stronger sales at service stations, hardware stores and grocery stores.

The Michigan Retail Index survey for May found that 31 percent of retailers increased sales over the same month last year, while 54 percent recorded declines and 15 percent saw no change. The results create a seasonally adjusted performance index of 35.2, up from 32.8 in April. A year ago May, the index stood at 43.4.

Index values above 50 generally indicate an increase in positive activity, while values below 50 indicate a decrease.

Looking ahead, 34 percent of retailers said they expect higher sales during June - August over the same period last year, while 40 percent project a decrease and 26 percent no change. That puts the seasonally adjusted outlook index at 45.6, down from 52.2 in April.

Note: William Strauss, Senior Economist and Economic Advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151.

Michigan Retail Index

May 2009 results
Index figures dating to July 1994 are available at
www.retailers.com/news/retailindex.html

May Performance
Retailers reporting increased, decreased or unchanged sales, inventory,
prices, promotions and hiring compared to the same month a year ago
(numbers in parentheses indicate April results)

             % Increased  % Decreased  % No Change  Index*       Responses
Sales        31 (27)      54 (58)      15 (15)      35.2 (32.8)  116 (119)
Inventory    19 (17)      44 (41)      37 (42)      35.9 (36.8)  115 (117)
Prices       30 (22)      13 (10)      57 (68)      60.3 (54.1)  113 (118)
Promotions   41 (39)      13  (5)      46 (56)      64.8 (64.9)  114 (118)
Hiring       10  (8)      22 (21)      68 (71)      41.9 (44.1)  114 (116)


Outlook for Next 3 Months
Retailers expecting increased, decreased or unchanged sales, inventory,
prices, promotions and hiring compared to the same period a year ago
(numbers in parentheses indicate April results)

             % Increased  % Decreased  % No Change  Index*       Responses
Sales        34 (39)      40 (34)      26 (27)      45.6 (52.2)  116 (119)
Inventory    26 (21)      43 (34)      31 (45)      39.3 (43.3)  115 (116)
Prices       28 (26)      10  (7)      62 (67)      60.6 (60.2)  114 (118)
Promotions   51 (48)      10  (3)      39 (49)      73.9 (75.0)  115 (118)
Hiring        7 (15)      16 (15)      77 (70)      44.8 (49.1)  115 (118)


May Sales Performance & Outlook for Next 3 Months, by Region
(the first number indicates sales performance for the month; the number in
parentheses indicates outlook for the next three months.)

             % Increased  % Decreased  % No Change
North        36 (40)      52 (36)      12 (24)
West         37 (58)      46 (25)      17 (17)
Central      21 (32)      58 (21)      21 (47)
East         45 (33)      33 (45)      22 (22)
Southeast    26 (15)      65 (62)       9 (23)

Question of the Month

In the past six months, have you reduced your total number of employees?

Yes        No
41.4%      58.6%

In the past six months, have you reduced the number of hours your current employees work?

Yes        No
47.4%      52.6%

*Seasonally adjusted diffusion index. A diffusion index, which is the sum of the percent of respondents indicating increase and half the percent indicating no change, is calculated and then seasonally adjusted using the U.S. Census Bureau's X-11 Seasonal Adjustment procedure. Index values above 50 generally indicate an increase in activity, while values below 50 indicate a decrease.