US retail sales increased less than expected in June as receipts at car dealerships surprisingly fell, but details of Tuesday’s report suggested the economy was on a solid footing at the end of the second quarter.

The Commerce Department said retail sales rose 0.2 per cent last month after an upwardly revised 0.5 per cent advance in May.

Economists polled by Reuters had forecast retail sales, which account for a third of consumer spending, rising 0.6 per cent after a previously reported 0.3 per cent gain in May.

So-called core sales, which strip out cars, petrol, building materials and food services, and correspond most closely with the consumer spending component of gross domestic product, increased a solid 0.6 per cent in June.

Core sales rose by a revised 0.2 per cent in May. They were previously reported as being flat and economists had expected them to rise 0.5 per cent 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.

The economy contracted sharply in the first quarter, but that was probably just a temporary setback.

From employment to manufacturing, the economy appears to be firing on nearly all cylinders with even housing appearing to be regaining its footing after slumping in late 2013 following a run-up in mortgage rates. Growth estimates for the second-quarter top a 3 per cent annual rate.

Overall retail sales last month were held back by a 0.3 per cent fall in receipts at car dealerships. The decline is surprising given that automakers reported a surge in motor vehicle sales in June. Car sales had increased 0.8 per cent in May.

Excluding autos, sales increased 0.4 per cent after rising by the same margin in May.

Sales at non-store retailers, which include online sales, increased 0.9 percent. Receipts at gasoline stations gained 0.3 per cent, and sales at clothing retailers advanced 0.8 per cent.

Receipts at sporting goods shops rose 0.6 per cent and sales at electronics and appliances stores gained 0.1 per cent.

But sales at building materials and garden equipment suppliers fell 1 per cent. Reuters