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Retail Sales Drop Unexpectedly in June

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Retail sales fell unexpectedly in June as U.S. shoppers tightened purse strings on automobiles and other goods.

The Commerce Department said retail sales slipped 0.3 percent last month, the weakest reading since February, after May’s downwardly revised 1 percent increase.

Economists had forecast retail sales rising 0.2 percent last month after a previously reported 1.2 percent jump in May. Core retail sales had been expected to increase 0.4 percent.

Tuesday’s weak retail sales report, together with signs of some softening of the labor market, dampened expectations a bit for an interest rate increase from the Federal Reserve this year, which most economists expect could come in September, Reuters reports.

Retail sales excluding automobiles, gasoline, building materials and food services dipped 0.1 percent following a 0.7 percent gain in May. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

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