Michigan Retailers Expect Slower 3rd Quarter Sales

LANSING, MI--(Marketwire - July 23, 2008) - Michigan retailers' sales and three-month forecasts both dipped in June, according to the Michigan Retail Index, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.

"While there was a small bump up in sales in April and May, most likely from the federal stimulus checks, the positive momentum wasn't sustained in June," said James P. Hallan, MRA president and CEO.

"Under current economic conditions, it's no surprise that the struggling Michigan retail industry is not expecting a quick turnaround. But there's a lot of volatility out there with gasoline prices, and the numbers can jump around from month to month."

The number of retailers posting year-over-year gains declined in June, compared to May. Similarly, the number of retailers predicting improved sales for July-September also fell.

For June, the Index showed 34 percent of retailers increased sales over the same month last year, while 55 percent recorded declines and 11 percent saw no change. The results create a seasonally adjusted performance index of 36.3, down from 43.4 in May, lowest since March.

Looking forward, 36 percent believe their sales will increase for July-September, while 37 percent forecast declines and 27 percent project no change. The results create a seasonally adjusted outlook index of 47.9, down from 53.0 in May and the lowest since the Index was established in 1994.

More than a third of retailers also said they're hiring fewer summer workers this year as sales lag, although 54 percent are able to maintain last year's levels and 8 percent increased their summer jobs.

The Michigan Retailers Association is the unified voice of retailing in Michigan and the nation's largest state trade association of general merchandise retailers.

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
June 2008 results
Index figures dating to July 1994 are available at
www.retailers.com/news/retailindex.html

June 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 May results)
             % Increased   % Decreased   % No Change   Index*     Responses
Sales       34 (38)       55 (45)       11 (17)       36.3 (43.4) 128 (132)
Inventory   27 (28)       37 (34)       36 (38)       44.1 (43.7) 125 (130)
Prices      49 (45)        5 ( 9)       46 (46)       70.6 (68.9) 127 (131)
Promotions  39 (30)       10 ( 8)       51 (62)       63.7 (62.0) 127 (131)
Hiring      10 (10)       19 (17)       71 (73)       44.9 (44.8) 125 (131)


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 May results)
             % Increased   % Decreased   % No Change   Index*     Responses
Sales       36 (40)       37 (30)       27 (30)      47.9 (53.0)  128 (131)
Inventory   19 (25)       41 (32)       40 (43)      38.2 (45.6)  124 (130)
Prices      50 (49)        4 ( 6)       46 (45)      72.8 (74.3)  127 (131)
Promotions  43 (31)        5 ( 4)       52 (65)      68.0 (65.6)  127 (130)
Hiring      11 ( 7)       19 (13)       70 (80)      45.4 (46.3)  125 (130)


June 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       30 (22)       55 (59)       15 (19)
West        48 (52)       48 (10)        4 (38)
Central     33 (50)       50 (25)       17 (25)
East        36 (18)       46 (55)       18 (27)
Southeast   25 (28)       67 (44)        8 (28)

Question of the Month
How does your summer hiring compare to last year?
Less            Same            More
37.6%           54.4%           8.0%

How does your summer hiring compare to your average for the past five
years?
Less            Same            More
46.2%           53.8%           0.0%

*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.

Contact Information: Contact: Tom Scott 517.372.5656