Alabama could end the year with flat retail sales if trends stay steady, another sign of the state's sluggish economy.

With two months left in its fiscal year, Alabama appears on track to maintain flat retail sales with 2.2 percent growth in sales tax revenue compared to last year, according to figures from the Alabama Department of Revenue. Some economists say that while sales tax collection has increased, much of it is due only to inflation and not to growth in retail business. Meanwhile, some local retail business owners say their sales have improved only modestly the past year — an indication of a weak economy.

Alabama has collected approximately $1.72 billion in sales tax revenue in the past 10 months. During the same timeframe last year, the state collected about $1.68 billion. Alabama's fiscal year ends Sept. 30.

Keivan Deravi, economist with Auburn University Montgomery, said that while Alabama's tax revenue is growing, it’s not due to a significant increase in retail business.

"That's basically inflation ... it's not really growth in retail sales," Deravi said of the state's sales tax growth. "Inflation is normally around 2 percent every year ... so the real rate of growth in retail sales this year is half a percentage point, if that."

The lack of significant retail sales growth is in keeping with the state's overall economic performance this year. For instance, Alabama’s average unemployment rate remained flat at 6.8 percent in June. That number was also higher than the 6.5 percent rate Alabama had in June last year. It was also higher than the U.S. average unemployment rate of 6.1 percent in June. In contrast, the U.S. unemployment rate decreased to 6.1 percent in June from 6.3 percent in May.

Still, though the state's sales tax revenue has grown little, it's better than expected, said Nancy King Dennis, spokeswoman for the Alabama Retail Association.

"It's not huge growth, but it's good," Dennis said of sales numbers. "January was the only month where we had a decrease in sales ... it was very cold and stormy that month."

Mike Manos, operations manager for Martin's Family Clothing, which is headquartered in Anniston and has a store in Oxford, said his company has experienced modest growth so far this year.

"We're showing a nice increase in sales in all Martin stores over last year," Manos said.

Manos said Martin's success has been due not to improvements in the economy, but mainly to changes in merchandise offered at the retail stores. Manos said Martin's has invested more in Auburn and Alabama football merchandise, along with children's clothing from California not readily available in other state retail stores — all of which have helped generate more sales.

"We've looked to distance ourselves from other retailers," Manos said.

Patrick Wigley, owner of Wig's Wheels in Anniston, said his cycling shop has experienced a modest, 5 percent growth in sales so far this year. His store traditionally sees 10 percent growth in sales year over year, Wigley said.

"We had a real slow start to the year due to inclement weather," Wigley said. "It hasn't been painful or anything ... but it's not any kind of major growth."

Bill Newman, president of Oxford Lumber, said his company's sales have improved some this year, but not as much as he would like.

"Transactions and customer counts are up, but it's not where I want it to be," Newman said of sales growth.

Newman said while he isn't seeing much growth in commercial activity, he is seeing more residents buying equipment and materials for improvements around their homes.

"It's not up to 2007 or 2008 levels, but it's better," Newman said.

 

Staff writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star.

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