WASHINGTON — U.S. retail sales increased slightly in June, evidence that consumers remain cautious despite steady job gains this year. Retail sales rose just 0.2% last month, the Commerce Department said Tuesday, held back by a sharp drop at building and garden supply stores.
So-called core sales, which strip out automobiles, gasoline, building materials and food services, and correspond most closely with the consumer spending component of gross domestic product, increased a solid 0.6% in June.
Core sales rose by a revised 0.2% in May. They were previously reported as being flat and economists had expected them to rise 0.5% in June.
Despite the below-expectations rise in overall sales, June's retail sales report was the latest sign of the economy's strengthening fundamentals, which could buoy optimism the recovery is on a self-sustaining path.
Sales also fell at restaurants and at auto dealers. The figures suggest that Americans are still reluctant to spend freely, limiting growth in the April-June quarter. While employers have stepped up hiring since January, wage growth remains weak and is barely keeping up with inflation. Retail sales are closely watched because consumer spending accounts for 70% of the economy.