January 16, 2006

Retail sales group sees “subdued” sales growth in 2006

NEW YORK (Reuters) - 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.