Retailers' three-month outlook, however, fell more than five points on the Index, to the lowest level of optimism since last August.

"January sales showed some improvement as the holiday shopping season extended into the new year, boosting confidence in the year ahead," said Larry Meyer, MRA chairman and CEO. "But that optimism didn't necessarily extend to the next few months. Retailers believe the challenges facing our state will continue and be especially tough through early spring."

The Index showed 36 percent of retailers increased sales in January over the same month last year, while 37 percent recorded declines and 22 percent saw no change. The results create a seasonally adjusted performance index of 50.4, up from 48 in December.

In addition, 45 percent believe their sales will increase for February-April, while 22 percent forecast declines and 27 percent project no change. The results create a seasonally adjusted outlook index of 56.8, down from 62.2 in December.

West Michigan retailers fared the best in January, with 40 percent ringing up better sales. Furniture and appliance stores led the field, with 54 percent reporting sales gains.

The Michigan Retailers Association is the unified voice of retailing in Michigan and the nation's largest state trade association of general merchandise retailers.