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Retail Forward's future spending index falls in May

10
May '06

After rising strongly so far this year, Retail Forward's Future Spending Index declined in May, indicating that spending should moderate in the coming month.

The May index registered a value of 95.9, compared with a 107.5 reading in April. That was down slightly from a year ago May, suggesting the growth pace also should be weaker than last year.

"In the first quarter, retail sales registered their strongest growth rate in six years," said Steve Spiwak, an economist with Retail Forward.

"This month's downshift in the Future Spending Index means growth in the near term should lose some luster as the effects of higher energy prices, rising interest rates and the downtrend in home buying ripple through the economy."

One bright spot in retailing should continue to be the Internet. ShopperScape results reveal that many consumers are taking advantage of enhancements to retailers' Web sites to perform activities such as locating stores, viewing circulars and researching products.

Access to online shopping may come in handy for Mother's Day. This month's results also show that more of this year's Mother's Day's budgets will be devoted to clothing and fine jewelry, products that are seeing increased penetration in the e-retailing space, while the average amounts spent on cards and flowers are expected to slip.

Everybody's Less Optimistic
In May, the Future Spending Index decreased from the prior month for each of the key income segments.

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