Retailers reported weaker than expected December sales results on Thursday, reflecting a 2007 holiday shopping season that is turning out to be one of the weakest in years due to a weakening job market and the ongoing housing slump.

The National Retail Federation, the industry's largest trade group, expects total sales for November and December combined rose 4 percent this past holiday season, which would mark the slowest pace of growth since 2002. The NRF will release its final tally of holiday sales next week.

The weak sales results crossed all retail categories leaving apparel sellers American Eagle and AnnTaylor Stores Corp along with department store Macy's Inc. particularly hard hit.

Among the rubble, Wal-Mart Stores Inc. topped analyst's average estimates by posting a 2.4 percent increase at U.S. stores, in line with its forecast for a 1 to 3 percent gain. The world's largest retailer reported strong performance in its pharmacy, grocery and electronics departments as it benefited from shoppers who preferred cheaper stores amid higher gas prices and a slumping housing market.

Discount rival Target reported a 5 percent decline in same-store sales. But on a calendar-adjusted basis, same-store sales declined 0.6 percent, compared to the 2.5 percent analysts expected.

Consumers are feeling the squeeze. They are spending less, Perkins from Retail Metrics said according to Associated Press. Now there's job uncertainty with last month's unemployment number showing a surprisingly large uptick. On Friday, the job report from the Labor Department showed that hiring dropped stalled in December, lifting the unemployment rate up to a two-year high of 5 percent.

Thomson Financial compared monthly results at 43 of the nation's largest retail chains based on analysts' estimates, reporting total December same-store sales rose only 0.5 percent compared to its revised estimate for a 0.7 percent gain. The results proved weaker than the 3.3 percent gain for the same period in 2006 for the overall retail sector.

The National Retail Federation, the industry's largest trade group, expects total sales for November and December combined rose 4 percent this past holiday season, which would mark the slowest pace of growth since 2002. The NRF will release its final tally of holiday sales next week.

The slowdown in consumer spending, which makes up two-thirds of the U.S. economy, has hurt sales for several months. Consumers are faced with an escalating credit crisis and recent news of a $100-a-barrel for oil has left economists more concerned of consumer's financial health.

AnnTaylor posted a 9.4 percent decline in same-store sales, much larger than the 1.9 percent forecast. It cut its fourth-quarter earnings estimate. Teen retailer Abercrombie and Fitch Co. had a 2 percent decline, worse than the 0.8 percent decrease. Macy's posted a 7.9 percent drop in same-store sales, worse than the 6.5 percent decline anticipated. For the November-December period combined, Macy's same-store sales were down 1.1 percent.

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