The outlook for Bermuda retailers is not good with the downturn in the US economy expected to hit the Island harder within the next few months, according to the Chamber of Commerce.

George Grundmuller, the head of the Visitor Retail section of the Chamber, said retailers had found shoppers were already showing caution in their spending, buying fewer goods.

And he expects the fall in the US economy and job layoffs to impact further on the number of tourists and the amount they spend on the Island. If the prediction comes true, it will add to the woes of retailers who have been hit by falling sales for the past three months.

"In general the outlook is not good," he said. "What worries people is the retailers don't see anything in the future which is going to make it better."

Mr. Grundmuller said that with the fall in tourism, the decline in the US economy and job layoffs in the US, things were bleak for retailers on the Island.

He said recent reports on CNN on the layoffs of thousands of workers in States had to have a knock-on effect in Bermuda.

He said: "People will not have as much money to travel and not as much money to spend."

And he added that there was more talk about a consumer-driven recession rather than a manufacturing-driven recession.

"With these layoffs and then the consumer-driven recession it will be even more challenging to get tourists here. The sentiment on the economy is widespread. We are so tied in with the US economy that consumers will try to be a little more careful.

"And we are already seeing that with customers much more price-driven. Instead of buying two or three items, they are buying one or two. They have definitely started looking at their budgets."

Mr. Grundmuller added: "Consumer sentiment in the US is changing and it will change the sentiment in Bermuda. I think people are already more cautious in spending locally - they are definitely not spending as much as before."

He said that tourist-related shopping was not doing as well as it had been and these times were "challenging to say the least".

He said the Retail Sales Index, which fell by 6.1 percent in June, 4.1 percent in May and five percent in April, was not the only sign that things were not as good as they have been.

"You can see there are lots of sales, there are signs everywhere, and things are not as strong as they have been."

He said the most affected area is currently clothing and accessories and staples like drugs and supermarkets had not yet been affected.

He said that tourism was unlikely to see an upturn for at least a year, with some predicting that it has not yet hit its all time low - another black cloud for the store owners.

The Retail Sales Index, which is a key economic indicator, showed that in June the amount of goods brought in from abroad has soared by more than nine percent, with the trend of residents buying abroad continuing to escalate.

And Mr. Grundmuller said that local stores were looking at ways to fight back against this and e-shopping.

This is the third consecutive month of decline in the Retails Sales Index so far this year, with four months out of the first six showing a fall, one month remaining flat, and only January showing an increase this year.

The monthly index showed the value of retail sales fell 3.2 percent below the previous year's level with an estimated gross turn over of $46.3 million in the retail sector for June.

After adjusting for inflation, which was registered at 3.1 percent in June, the total volume of retail sales fell by 6.1 percent.

Although the number of shopping days were the same during the month, June 2001 had one more Saturday than the previous year.

Consumer spending on clothing and footwear also continued to fall compared to last year, and sales in the apparel sector in general fell by a massive 9.8 percent.

More than half of the participating outlets in the monthly gathering of sales data reported softer sales for the month, with the largest declines experienced by those outlets catering to tourist demand.

Residents returning to the Island from overseas holidays and business trips declared goods worth $2.48 million worth of goods at customs. This represents a 9.2 percent increase year on year.

During the second quarter of 2001 about $9.31 million worth of goods was declared compared to $8.63 million in the second quarter of 2001 - nearly an eight percent rise in the amount of goods declared.