U.S. retail sales unexpectedly fell in June as households cut back on purchases of automobiles and a range of other goods, raising concerns the economy was slowing again.

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

    “The underlying tone of this report suggests that the recovery is beginning to show some signs of strain. If anything it will temper, at the margin, any consideration for a September rate hike,” said Millan Mulraine, deputy chief economist at TD Securities in New York.

    The Commerce Department said retail sales slipped 0.3 percent last month, the weakest reading since February, after May’s downwardly revised 1.0 percent increase.

    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.

    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.

    Coming on the heels of June’s disappointing employment report and sharp drop in small business confidence last month, the weak retail sales data suggest the economy might have lost some momentum at the end of the second quarter, having struggled at the start of the year.

    The economy contracted at a 0.2 percent annual rate in the first quarter. The soft core retail sales prompted Goldman Sachs to lower its second-quarter GDP growth estimate by two-tenths of a percentage point to a 3 percent pace. (SD-Agencies)