By  on September 15, 2009

WASHINGTON — Two reports from the federal government on Tuesday indicated an economy on the slow road to recovery, but many potholes still remain.

Retail sales showed signs of life in August as apparel retailers reported small gains, but uncertainty stemming from the economic downturn did not evaporate, as 12-month comparisons were down, the Commerce Department said. Meanwhile, a modest rise in the Labor Department’s Producer Price Index of domestically manufactured goods kept inflationary fears at bay, economists said.

Sales at specialty stores and department stores each increased a seasonally adjusted 2.4 percent in August compared with July. The increase was the largest for specialty stores since February. However, in 12-month comparisons, specialty store sales declined 5.1 percent to $17.5 billion and department store sales fell 4.7 to $15.8 billion.

All retail and food service providers reported a sales increase of 2.7 percent in August compared with July, the largest increase since January 2006. However, sales declined 5.3 percent year-over-year to $351.4 billion.

Economists saw some signs for hope in August sales results, but remained skeptical the economy is poised for a full recovery.

“Digging beneath the headlines, it appears as if the back-to-school retailers fared the best,” said Richard Yamarone, director of research for Argus Research Corp. “Impressive gains at clothing, accessories, department and electronics stores implies school-bound shoppers were out in droves last month.”

Rosalind Wells, chief economist for the National Retail Federation, said, “Shoppers were a bit more comfortable digging into their wallets last month [in August] and retailers are hopeful that we’ve turned a corner.”

But Yamarone said the state of consumer affairs remains lackluster.

“Rising unemployment, deteriorating incomes and salaries, and the exhaustion of unemployment benefit insurance for a large portion of the labor force doesn’t make for a sustainable spending environment,” he said.

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