NRF Raises Retail Sales Forecast After Strong H1

The US National Retail Federation (NRF) is revising upward its 2004 forecast for GAFS sales (general merchandise stores, apparel stores, furniture and home furnishings stores, electronics and appliances stores, and sporting goods, hobby, book and music stores) following strong retail sales in the first half of this year.

The NRF is raising its 2004 forecast to 6 percent growth from 5 percent after an extraordinary 9 percent GAFS sales growth in the first five months of this year.

The NRF said GAFS sales jumped 9.9 percent in the first quarter of 2004 while the second quarter forecast is for a rise of 7 percent.

As 2004 continues, the rate of growth that retailers have seen will be harder to achieve but third and fourth quarter gains are expected to range between 4.0-4.5 percent. In comparison, GAFS sales rose by just 3.9 percent in 2003.

A strong improvement in the US employment situation has helped boost confidence and spending following the creation of 1.3 million new jobs in the first six months of 2004, according to NRF Chief Economist Rosalind Wells.

Although unemployment has fallen there are new concerns, mostly inflation and rising interest rates. The NRF sees inflation being contained, however, due to a slower rate of economic growth and continuing high productivity.

“Rising interest rates and moderate inflation are the logical consequence of a rapidly-growing economy and, at this point in time, are not alarming nor will they impinge on sustainable growth,” Wells said.