Washington, D.C. -- Slower-than-expected growth during the first half of the year caused the National Retail Federation to lower its retail sales forecast for 2014. NRF said it now expects sales will grow 3.6% in 2014, down from its earlier forecast of 4.1%. The group joined other industry experts in forecasting a pick-up in activity in the next five months.
“The severe weather and other factors we experienced earlier this year have taken their toll on retail, but most of those problems are behind us,” said NRF chief economist Jack Kleinhenz. “A second look at our forecast shifted our expectations slightly, but it’s important to note that the outlook is positive. Sales are growing and we expect them to continue at a moderate pace.”
NRF president and CEO Matthew Shay said that no retailer was immune to the doldrums witnessed during the first quarter.
“That said, there is plenty of evidence that the second half of the year will be better for the industry as consumers begin to feel more optimistic about their spending decisions,” Shay said. “And though we maintain realistic expectations of retail sales growth in 2014, we are optimistic that the chances for a stronger economy still exist.”
During a conference call with reporters and analysts, the NRF noted that poor weather conditions in many areas of the country during the first quarter helped to create a more difficult sales environment than anticipated.
NRF also said the slow recovery following the recession continues to weigh on the job market and business spending. Consumers remain modest spenders and are selective and price sensitive.
Despite these and other challenges, “the positive message is how strongly we feel the second half of the year will be,” Shay said.
NRF chief economist Kleinhenz noted that employment during the first six months of this year has expanded at its strongest pace since 2005, and that business and consumer confidence have edged higher.
NRF calculated that sales grew 2.9% during the first half of the year and will grow at least 3.9% during the second half. (The numbers include general retail sales and non-store sales, and exclude automobiles, gasoline stations, and restaurants.)