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Retail Sales Growth Seen Moderating in '07: Trade Group

A slowdown in the economy and housing could moderate retail sales growth this year, the National Retail Federation said.

In its quarterly sales forecast, the NRF predicted that 2007 retail industry sales--which exclude cars and sales at gas stations and restaurants--will increase 4.8% from last year, with subdued sales in the first half of the year giving way to accelerated sales in the second half.

The NRF said retail sales rose 6.3% in 2006, which was higher than the 4.7% gain it had been expecting.

"This year, slow economic growth will be reflected in moderate consumer spending and retail sales gains," said NRF Chief Economist Rosalind Wells in a statement.

"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."

The NRF, which is holding its annual conference in New York, said it expects retail sales to increase 3.8% in the first quarter of 2007, 4.6% in the second quarter, 5.2% in the third quarter and 5.7% in the fourth quarter.

Throughout the year, luxury retailers will continue to outperform others while online shopping continues to escalate, the NRF said, adding that retailers catering to the lower and mid-level income consumer will be challenged.

Demand for home-related goods will continue to be hurt by a soft housing market, the trade group said.