New York — The National Retail Federation (NRF) is forecasting a 4.8 percent increase in retail industry sales this year over the 6.3 percent gain recorded in 2006.
The projection, part of the trade group’s quarterly retail sales outlook report, was released this morning at NRF’s 96th Annual Convention & Expo, held here at the Javits Convention Center.
NRF expects economic growth to be “subdued” during the first half of 2007, although the climate will give way to accelerated retail sales in the second half of the year. Specifically, retail sales gains of 3.8 percent in the first quarter should increase to 4.6 percent in the second, 5.2 percent in the third and 5.7 percent in the final quarter, the report projected.
Last year, a stronger-than-expected sales surge was fueled by robust consumer spending in the first half of 2006. As anticipated, the sales picture weakened in the second half as consumer spending power was challenged by the housing slowdown, high energy costs and lackluster employment growth.
“This year, slow economic growth will be reflected in moderate consumer spending and retail sales gains,” said NRF chief economist Rosalind Wells. “The quarterly industry sales pattern will be the opposite of last year with modest gains early in the year and better increases in the second half.”
According to the NRF report, current retail trends will persist throughout the year with luxury retailers continuing to outperform and online shopping continuing to escalate. Retailers catering to the lower and midlevel income consumer will find achieving sales gains more challenging, NRF said, while demand for merchandise related to the home will be impacted by a soft housing market.