Retail sales seen slowing in 1st half

Industry group forecasts sales growth to slow to 4.8% in '07; cites moderate pace of consumer spending early in the year.

NEW YORK ( -- Subdued economic growth could moderate the pace of consumer spending and retail sales gains in the first half of 2007, according to the National Retail Federation's annual industry forecast released Tuesday.

In its quarterly Retail Sales Outlook Report, the NRF expects retail sales, excluding autos, gasoline and restaurants, will increase 4.8 percent from last year, much softer than last year's 6.3 percent gain.

But on a positive note, the group said it does anticipate sales to accelerate in the second-half of the year, which also includes the crucial fourth-quarter holiday shopping period that typically accounts for 50 percent of retailers' annual profits and sales.

"This year, slow economic growth will be reflected in moderate consumer spending and retail sales gains. [But] the quarterly industry sales pattern will be opposite of last year with modest gains early in the year and better increases in the second half," NRF chief economist, Rosalind Wells, said in a statement.

According to the NRF, sales gains of 3.8 percent in the first quarter should increase to 4.6 percent in the second quarter, 5.2 percent in the third, and 5.7 percent in the final quarter.

Similar to last year's trends, the group expects luxury sellers and online merchants to outperform other retail sectors. But home furnishing sellers will struggle amid a slowing housing market.

Moreover, the group said retailers that sell to lower and mid-income consumers, such as Wal-Mart (Charts), Target (Charts) andJ.C. Penney (Charts) and Sears (Charts), will have a harder time increasing their sales at least early in 2007.

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