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Economy in Brief

Modest Gains in Weekly Chain Store Sales Leave Month Short
by Tom Moeller July 25, 2006

Weekly chain store sales edged up 0.2% last week but the rise failed to recover the prior week's 0.6% decline, according to the International Council of Shopping Centers (ICSC)-UBS survey.

Together with a similar 0.2% up tick in weekly sales early in the month, these modest increases did not recoup larger w/w declines at the end of June and in mid-July. As a result, sales this month are running 0.7% below the June average.

Both the June & May average sales levels fell 0.4% from the prior month. During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.

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.

The leading indicator of chain store sales from ICSC-UBS fell another 0.2% (-2.2% y/y) in the latest week, the fourth decline in the last five periods.

The weakness in sales undoubtedly is related to continued gains in gasoline prices. During the third week of July the average retail price for regular gas settled at $3.00 per gallon (31.2% y/y) and prices so far in July have averaged $2.98.

A continued gain yesterday in the spot market price of gasoline to $2.89 per gallon (45.3% y/y) portends further gains in retail gas prices.

ICSC-UBS (SA, 1977=100) 07/22/06 07/15/06 Y/Y 2005 2004 2003
Total Weekly Chain Store Sales 467.1 466.2 1.9% 3.6% 4.7% 2.9%
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