In a sign of a potentially stagnating retail economy, Michigan retail sales in March followed similarly low numbers in January and February, according to a new report.
Around 45% of retailers surveyed for the latest Michigan Retailers Association Retail Index reported a drop in sales in March from February. About 38% said they saw an increase while 17% reported no change.
The figures put the Retail Index at 44.3, down from 48 reported for January and February. The March figure is a drop of 13.1 from a year ago.
“The stagnation of first-quarter sales remind us that adaptability and strategic foresight are our greatest assets. It's not about the setback, but rather the opportunity to reassess, innovate, and emerge stronger in the quarters ahead," MRA President and CEO Bill Hallan said in a news release. “Michigan shoppers can make small changes to improve the way our small businesses fare going forward — they can switch just one in 10 of their purchases to a local business and improve their local economy.”
Increasing product costs and shipping are hurting retailers, according to the survey.
A majority of the respondents said material price increases are impacting their businesses. The U.S. inflation rate was 3.5% over 12 months at the end of March, up slightly from the previous 3.2%, according to the U.S. Labor Department. Higher freight costs are also a major concern as they impact how retailers send and receive products.
The 100-point retail index provides a snapshot of the state’s overall retail industry. Values above 50 points generally indicate positive activity. The seasonally adjusted performance index is conducted by the Michigan Retailers Association with the Federal Reserve Bank of Chicago’s Detroit branch. About 54 retailers participated in the March survey.
Despite the slow start to the year, retailers remain mostly optimistic.
About 62% of those surveyed said they believe their sales will increase through June, with 13% expecting sales to decline and 25% anticipating no change. That comes out to a 63.7 prediction index rating, down from last month’s 67.3 figure.
