January was another disappointing month for retail sales across most of Cochise County. Retail sales, one of the best indicators of the overall health of the economy, fell by 6.5 percent after adjusting for inflation. This followed declines of 7.4 and 15.5 percent in November and December, respectively. Retail sales at the county level were on shaky ground for most of last year, alternating between periods of positive and negative monthly growth.

Cochise County’s restaurant and bar sales were up 34.7 percent in January. This followed a 30 percent decline in December. In 2007, restaurant and bar sales were strong in the first and second quarters, but slowed considerably in the third quarter and declined in the fourth quarter. It’s too early to tell if January’s figures reflect an anomalous month, an accounting irregularity, or a recovery of this industry.

The county’s accommodation sales (hotel, motel, and other temporary lodging stays) were up 4.1 percent in January, after the inflation adjustment. In 2007, sales were up 19.7 percent for the year, led by exceptionally strong growth in the first three quarters of the year. Sales fell in October, rebounded in November, but declined again in December. In December, sales were down 7.7 percent after inflation.

Part of the reason for the slowed growth in accommodation sales in late 2007 was the higher base established by strong sales beginning in the fourth quarter of 2006. Then, in the first 9 months of last year, monthly sales gains were in the double digits. This higher base means sales in subsequent periods will show slower rates of growth, even though sales remain high from an historical perspective.

The strong growth in accommodation sales last year was driven by a variety of factors, including a stronger tourism industry. Another factor was an increase in room rates. According to data from the Arizona Office of Tourism, the average daily room rate in Cochise County increased by 10.1 percent last year. The increase was spurred by strong demand for rooms, which was up 12.9 percent. The supply of rooms in Cochise County last year was up 6.2 percent, mostly as a result of new hotels that opened in Sierra Vista.

At the city level, restaurant and bar receipts in Benson were up 44.4 percent in January, after inflation. This followed weak performance in the fourth quarter of 2007, which saw double-digit declines in October and December. Last year, Benson’s restaurant and bar sales were down 3.1 percent after inflation. As with county level sales, it’s too early to tell whether January’s sales reflect an anomalous month, an accounting irregularity, or a recovery of this industry. Broader economic conditions suggest a recovery is not likely in 2008.

Benson’s accommodation receipts were down 11.6 percent in January. Last year, sales were up 17.6 percent. Cochise College Center for Economic Research focus group discussions in Benson and Sierra Vista indicate that Benson’s accommodation industry benefits from military travelers on temporary duty to Fort Huachuca. Discussions in Sierra Vista suggest this may be the result of higher room rates in Sierra Vista, which may exceed the military’s per diem rate of $71 for lodging.

Retail sales are not reported for Benson due to the city’s two-tiered tax system, which precludes accurately estimating sales based on tax collections. Retail sales tax revenue, however, was up 4.3 percent in the January comparisons. Adjusting for inflation, this reflects zero growth in the city’s retail sales tax revenue, when compared to January last year. In 2007, the city’s retail sales tax revenue was up 38.2 percent, due primarily to the opening of the Wal-Mart Supercenter in late 2006.

In Bisbee, retail sales in January were up 6.1 percent in inflation-adjusted terms. This followed declines in November and December.

Bisbee’s restaurant and bar sales in January were down 2.3 percent, after adjusting for inflation. This follows an 18.9 percent decline in December. On the whole, Bisbee’s restaurant and bar sales were down 4.4 percent last year, after inflation.

Bisbee’s accommodation receipts in January were up 47.9 percent. This follows inflation-adjusted declines in November and December. Last year, Bisbee’s accommodation sales were up 20.9 percent, led by exceptionally strong growth in the first 7 months of the year.

In Douglas, restaurant and bar sales were down 15.1 percent in January, after inflation. This was the seventh consecutive month of declining sales. Last year, sales were down by 2.9 percent after inflation.

Retail sales are not reported for Douglas due to the city’s two-tiered tax system. Retail sales tax revenue, however, was down 5 percent in the January comparisons. This was the fourth consecutive month of declining retail sales tax revenue for the city.

Accommodation sales are not reported for Douglas due to the small number of establishments and the Arizona Department of Revenue’s confidentiality policy.

In Huachuca City, retail sales fell 41 percent in January after inflation. This was the fifth consecutive monthly decline for the town’s retail sales. Sales were down 17.4 percent last year, the largest overall decline in the county.

Accommodation and restaurant and bar sales are not reported for Huachuca City due to the small number of establishments and ADOR’s confidentiality policy.

In Sierra Vista, retail sales fell 9.6 percent in January. This was the third consecutive month of declining sales for the city, which serves as the retail hub of Cochise County. Retail sales in Sierra Vista account for about two-thirds of the countywide total. 

Sierra Vista’s restaurant and bar sales fell 1.3 percent in January, after the inflation factor. Sales fell each month in the fourth quarter of last year, following exceptionally strong growth in the first three quarters.

In January, Sierra Vista’s accommodation sales were up 15.1 percent after inflation. Last year, sales were up 21.1 percent for the year.

In Tombstone, retail sales in January were down 15.6 percent after inflation. Tombstone’s retail sales were down each month in the fourth quarter of last year, following alternating periods of positive and negative growth earlier in the year.

Tombstone’s restaurant and bar sales were up 1 percent in January. Last year, sales were exceptionally strong in the first three quarters, but the last quarter saw sales drop each month.

Accommodation receipts in Tombstone were up 35 percent in January, after the inflation adjustment. This followed a decline of 8.7 percent in December.

In Willcox, restaurant and bar sales were up 1 percent in January, following an inflation-adjusted drop of 5.6 percent the month prior. Last year, restaurant and bar sales in Willcox were down 3.9 percent after inflation.

Accommodation receipts in Willcox were down 3.9 percent in January, after an inflation-adjusted drop of 12 percent in December. Last year, receipts were up 23.8 percent, the largest annual increase in Cochise County. Sales saw double-digit growth every month from March through September, but then fell in October and December and saw only modest growth in November.

Retail sales are not reported for Willcox due to the city’s two-tiered tax system. Retail sales tax revenue, however, was up 8.3 percent in the January comparisons. For 2007, the city’s retail sales tax revenue was up 3.4 percent compared to 2006. This was slightly ahead of inflation, which was 3.2 percent for the year.

If you have any questions on the economy, please contact the Cochise College Center for Economic Research at (520) 515-5486 or email us at cer@cochise.edu.

Be sure to check out the CER’s website at www.cochise.edu/cer.