U.S. retail sales increased slightly in June, the government reported Tuesday, signaling that consumers remain cautious despite steady labor-market improvement this year. However, some details of the report suggest the economy was healthy at the end of the second quarter. The Commerce Department said retail sales rose 0.2 percent last month, a significant slowdown from the 0.5 percent gain in May. Sales were limited by a sharp decline at building-materials and garden-supply stores. Sales also fell at auto dealers and restaurants. Economists expected a 0.6 percent gain in June. The figures initially suggest that Americans are reluctant to spend freely, which could slow growth in the April-June quarter. Retail sales are closely watched because consumer spending accounts for 70 percent of U.S. economic activity. Despite the below-expectations advance, some details in the report added evidence that the economy is fundamentally healthy. "Core" sales, which exclude automobiles, gasoline, building materials, and food services, and correspond most closely with the consumer-spending component of gross domestic product (GDP), increased 0.6 percent in June, following a 0.2 percent rise the previous month. Similarly, a measure of retail sales that excludes volatile categories like gasoline rose 0.7 percent. From employment to manufacturing, the economy seems to be performing well, with even housing seeming to be regaining momentum after slumping in late 2013. GDP growth estimates for the second quarter are above 3 percent at an annual rate.
