Retail sales group sees ‘subdued’ sales growth in 2006

NEW YORK  – Rising energy costs and a slowdown in the housing market could translate into subdued retail sales growth in 2006, industry trade group the National Retail Federation said in its quarterly retail sales forecast released on Monday.

The NRF, holding its annual conference in New York, predicted that 2006 retail industry sales — which exclude automobiles, gas stations and restaurants — will increase 4.7 percent from last year, with sales being constrained by a slowdown in the economy and consumer spending.

In 2005, NRF said retail sales rose 6.1 percent, which was higher than the 5.6 percent gain it had been expecting.

"With the housing market beginning to slow, consumers will be challenged to find new sources of spending power." said NRF Chief Economist Rosalind Wells in a statement. "The strong retail sales we saw in the second half of 2005 will be replaced by more conservative spending in the New Year."

The NRF said it expects 2006 first-quarter retail sales to increase 5 percent, compared with a 6.5 percent rise in the fourth quarter of 2005.

Certain specialty retailing categories should continue to achieve "solid" sales growth in 2006, it said, like clothing and accessory stores, food and beverage retailers, and health and personal care retailers.

The NRF said building material stores, warehouse clubs and electronic shopping had the highest growth last year. It expects building-related outlets and furniture stores to lose some momentum as the housing market softens.

Electronics retailers should be able to sustain strong demand, the trade group said.