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Economy in Brief

Chain Store Sales Reflect A Cheery Spirit & Lower Gas Prices
by Tom Moeller December 28, 2005

Chain store sales added 2.8% last week to the 2.4% jump during the week prior according to the International Council of Shopping Centers (ICSC)-UBS survey.

The two increases did much to rescue the December average from an abysmal start when sales fell 3.1% during the opening week. As a result the month's average is down just 0.8% from November which rose 1.2% from October.

During the last ten years there has been a 51% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.

Lower gasoline prices may have added to consumers' Holiday spirit. Retail gas prices fell a penny to $2.20 per gallon (22.7% y/y) last week after two weeks of moderate increase. Natural gas prices also backed off a bit after five weeks of strong gain although they were still roughly double last year's level.

Further declines in gasoline & natural gas prices were evident in yesterday's spot market trading when gasoline ended down four cents from the week prior. Warmer weather helped lower natural gas prices roughly $3/mmbtu or 22% to the lowest level since mid-November.

The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

ICSC-UBS (SA, 1977=100) 12/24/05 12/17/05 Y/Y 2004 2003
Total Weekly Chain Store Sales 467.6 455.0 3.9% 4.6% 2.9%
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