The National Retail Federation said it expects U.S. retail sales to rise 4 percent in 2011, continuing a trend of improving consumer spending last year that intensified over the holidays.

The industry group said that stronger-than-expected sales in November and December made it cautiously optimistic that shoppers will further increase spending this year.

With retailers leading the charge, the economic recovery appears to be gaining some steam, NRF Chief Executive Matthew Shay said in a statement.

But the NRF warned that reluctance of small businesses to add employees and higher gasoline prices could yet slow consumer spending.

U.S. retailers rang up their best holiday sales in six years, with the 2010 season's sales up 5.7 percent, according to the NRF. The NRF had forecast a 3.3 percent increase. The NRF forecasts exclude online sales, cars, gasoline and restaurants.

(Reporting by Phil Wahba; Editing by Steve Orlofsky)

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