Published in Small Business

Survey: Michigan retailers expect strong growth through summer

BY Wednesday, June 05, 2019 10:07pm

majority of retailers across Michigan report higher sales this spring and expect to sustain growth well into the summer.

In a monthly survey released in late May by the Michigan Retailers Association, 56 percent of respondents reported a month-to-month increase in sales from March to April, while 29 percent had lower sales. The remaining 15 percent reported no change.

The Lansing-based association’s survey also found that 60 percent of responding retailers expect sales growth to continue at least through July, while 14 percent predict a decline in their business. The rest expect no change.

The higher results and expectations for further growth follow sales declines reported in the first three months of 2019. Association President and CEO James Hallan attributed the initial dip to weather, which had a “dampening effect” on retail sales in the first quarter.

“The last couple of months were sluggish. April was much better and clearly retail is weather sensitive,” Hallan said. “Finally in April, we started to see a little breakthrough, and I think we’ll start to see a rise going forward. The fundamentals are really very strong. There’s pent-up demand.

“Consumers have spendable dollars and we just needed to get some good weather to get them into stores.”

Results from the association’s monthly activity survey resulted in a retail index of 59.6 for April, which compares to 42.6 in March and 43.7 in April 2018. Any reading over 50 is “usually pretty good,” Hallan said.

The outlook among retailers registered an adjusted 65.5 for the index, which the association described as “a solid forecast for the summer.”

Meanwhile, the tight labor market remains a negative for the retail industry, according to the April index. As in many industries right now, some retailers report difficulty finding help, especially for seasonal jobs as they head toward the summer.

“Retailers are starting to see strong and steady sales. Now they need to find the labor,” Hallan said. “It’s nice to see ‘help wanted’ signs up again in stores, but the flip side is it’s tough to find people.”

Statewide, unemployment in Michigan was at a seasonally adjusted 3.7 percent in April, the same rate as a year earlier, according to the Michigan Department of Technology, Management and Budget. Labor markets across the state “exhibited typical seasonal movement for April,” department Director Jason Palmer said.

Ottawa County at 2.4 percent had the lowest unemployment rate in Michigan as of April, and Kent County was second-lowest at 2.5 percent. Unemployment was 2.8 percent in both Kalamazoo and Allegan counties in April, the fifth- and sixth-lowest, respectively, among Michigan’s 83 counties.

Tourism ‘looks good’

As summer approaches, the head of the state’s travel bureau expects another record year for Michigan’s tourism industry.

Based on data he sees and anecdotal information from conversations with local visitors bureau directors that “all tell me everything looks good,” Travel Michigan Vice President Dave Lorenz believes travel volumes will grow 4 percent this year. He expects spending by travelers will increase 3 percent.

Those kinds of growth rates are consistent with what Michigan’s tourism industry has put up in recent years, Lorenz said.

“I don’t see any indication which would show we shouldn’t expect that to continue this year,” he said. “Even though some people are talking about a slowdown in the fourth quarter, I am very confident that we are going to have another record-breaking year for the warm weather season.”

Lorenz shares Hallan’s concerns about the tight labor market. Low unemployment limits the availability of the local talent pool for tourism-related businesses, he said.

“We just simply cannot find enough employees from domestic sources,” Lorenz said. “The fact is that we’ll have some of our industry not fully operating simply because they can’t find enough employees.”

Volatile, yet improving

Nationally, retail sales across the U.S. dipped a seasonally adjusted 0.2 percent in April from March, although they grew 5.5 percent compared to a year ago, according to the National Retail Federation.

Jack Kleinhenz, the group’s chief economist, attributed the small month-to-month decline to weather and slower federal tax returns. Long-term fundamentals for retail sales nationally remain positive, Kleinhenz said.

“Despite there being a lot of volatility in the data from month to month, the long-term comparisons look good and the three-month average in particular is getting stronger,” he said. “We think we remain on track to meet our projections.”

The National Retail Federation forecasts that U.S. retail sales will grow 3.8 percent to 4.4 percent this year to more than $3.8 trillion.

The expectation comes amid high consumer confidence. The Conference Board reported a consumer confidence index of 134.1 for May, up from a 129.2 in April and close to an 18-year high.

Consumer spending across the nation grew 0.3 percent in April, easing from 1.1-percent growth in the prior month, according to the U.S. Department of Commerce. 

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