The latest Executive Opinion Survey conducted by the National Retail Federation (NRF) and the Bank of Tokyo Mitsubishi Ltd. (BTM) indicates that even as the retail sales outlook remains upbeat versus a year ago, pricing pressure continues to impact the overall Retail Sector Performance Index.

The Index, or RSPI, grew at a slower pace in September compared to August, pegging at 52.5 vs. 56.9 last month. However, the latest RSPI was 11.6 percentage points above the same period a year ago. The RSPI, which measures retail executives’ evaluations of a number of core retail performance metrics, is based on a scale of 0% – 100% with 50% equaling normal.

“Clearly the retail industry has seen a significant improvement over the last year with a marked improvement in sales, customer traffic and the average transaction,” said Michael Niemira, Senior Retail Analyst, Bank of Tokyo-Mitsubishi, Ltd.

“However, operational issues such as employment and pricing power continued to languish in 2003 compared to the previous year.” The Operations Index, which takes into account the employment and inventory, came in at 45.8, down 160 basis points from the 47.4 in August and was at its lowest point since April.

Retailers surveyed were still very optimistic about business conditions. As indicated in the Demand Outlook, which measures retailers’ six-month outlook on sales, sentiment fell 750 basis points from last month’s all-time high reading, but still 1530 basis points above the same period year-over-year.

The September Pricing Index (measure of industry’s discounting or pricing power) stood at a very low 16.7, its weakest reading since December. The Pricing Index for September 2002 was at 18.8.