A separate report on Monday, however, showed factory activity in New York State accelerating in July, bolstering the view of economists that growth was likely to pick up soon.

Many economists now think the nation’s gross domestic product expanded at no more than an annual rate of 1 percent in the second quarter, but employment growth has been solid and Wall Street still expects the Fed will soon trim the $85 billion in Treasury and mortgage securities that the central bank is purchasing each month.

“The disappointing retail sales report underscores the soft end to the first half,” said Millan Mulraine, senior economist at TD Securities. Retail sales increased 0.4 percent in June, the Commerce Department reported, lifted by demand for automobiles and higher gasoline prices. But sales of building materials fell by the most in a year, a potentially worrying signal from the housing market. Economists had forecast a 0.8 percent increase in June.

A second report from the Commerce Department showed businesses were carefully managing their stocks to avoid an unwanted supply of goods in the face of lackluster demand. Business inventories rose 0.1 percent in May after a 0.2 percent gain in April.

But there are hopeful signs for the factory sector. The Federal Reserve Bank of New York’s Empire State general business conditions index rose to 9.46 this month from 7.84 in June. A reading above zero indicates expansion in New York’s factory activity. The survey’s measure of new orders rebounded into positive territory, while two employment gauges also improved.

Article source: http://www.nytimes.com/2013/07/16/business/june-retail-sales-increased-but-not-as-much-as-expected.html?partner=rss&emc=rss