The strong recovery in retail sales paused last month as consumer buying remained virtually unchanged, the Commerce Department said yesterday.

Despite the major tax cut that took effect last month, retail sales in July declined very slightly, from a seasonally adjusted $98.69 billion in June to $98.66 billion in July.

The decline--the first since February--went in the opposite direction of July unemployment figures released last week, which showed a sharp rise in jobs and a steep decline in number of people out of work.

As a result, the numbers surprised some private economists who had expected higher retail figures, counting on consumer buying as a critical factor in maintaining the recovery.

"This is not the most optimistic set of numbers I've seen recently," said David Wyss, chief financial economist for Data Resources Inc. Noting that the tax cut went into effect last month, Wyss said, "I had expected a substantial growth; it's worrisome that it didn't occur. It may mean that we are seeing a quicker slowdown in the recovery than we thought."

However, several other economists, including those in the government, said they didn't believe that the marginal decline was significant.

"It is nothing to be alarmed about," said Lawrence Chimerine, chairman and chief economist of Chase Econometrics. Noting that retail sales increased substantially in March, April and May, Chimerine said he hadn't expected consumer buying to keep up with those levels. Even so, he said, "the pace of the recovery is definitely going to slow down; it won't stop but it won't grow as rapidly as it did before."

Commerce Department officials agreed. "Consumers paused to catch their breath in July after boosting their spending sharply in the second quarter," said Commerce Secretary Malcolm Baldrige.

"The figures are in line with our expectations for the second half of the year for a solid but slower rate of growth," said Ago Ambre, a senior Commerce Department economist.

Another factor in the lack of growth may be the heat wave, noted Jerry Jasinowski, chief economist of the National Association of Manufacturers. Not only are many consumers less willing to go out in the hot weather, but their spending may also be deterred by concern over higher air conditioning bills, Jasinowski said.

Commerce Department economists said the marginal decline was largely due to the 1 percent drop in auto dealer sales, from $19.36 billion in June to $19.16 billion in July. The decrease is due primarily to reductions in dealer financing incentives. However, the Commerce Department noted that even so, the dollar volume for car sales in July was the second highest on record and 30.8 percent above last July's sales.

Excluding auto sales, total retail sales increased 0.2 percent in July to an adjusted $79.49 billion.

The increase came despite a steep 1.8 percent drop in sales by general merchandise stores, including department and variety stores. However, furniture and home furnishing stores reported a 1.5 percent increase.