LANSING — Michigan retailers are growing more concerned about the price of gasoline, although retail sales held up in February despite rising prices at the pump, according to the latest Michigan Retail Index, a joint project of Michigan Retailers Association and the Federal Reserve Bank of Chicago.
Concern was evident as retailers’ three-month sales projections dropped to their lowest level since October. “Gas prices” were the most frequently voiced concern.
February’s retail sales, however, were stronger than a year ago and didn’t fall off much from January’s strong performance.
“Rising gas prices are always a concern for retailers, because they take a larger share of consumers’ income,” said MRA President and CEO James P. Hallan. “But February sales remained solid despite gas prices pushing close to $4 a gallon in some areas. It’s a situation we’re watching with great interest.”
The Michigan Retail Index for February found that 48 percent of retailers increased sales over the same month last year, while 28 percent recorded declines and 24 percent saw no change. The results create a seasonally adjusted performance index of 59.3, down from 63.8 in January but up from 59.1 in December.
The Michigan Retail Index gauges the performance of the state’s overall retail industry, based on monthly surveys conducted by MRA and the Federal Reserve. Index values above 50 generally indicate positive activity; the higher the number, the stronger the activity.
Looking forward, 61 percent of retailers expect sales during March-May to increase over the same period last year, while 11 percent project a decrease and 28 percent no change. That puts the seasonally adjusted outlook index at 67.9, down from 78 in January.
National sales rose by 1.1 percent in February, the biggest gain since September, according to the U.S. Commerce Department. Sales grew 0.8 percent, excluding gas stations.
William Strauss is senior economist and economic advisor with the Federal Reserve Bank of Chicago.