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.
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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.
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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.
Kevin Regan, senior managing director and retail industry expert with FTI Consulting, said, “Consumers are still concerned over unemployment and heavy debt. They’re not ready to lead a recovery yet.
The same lack of demand that impacted yearly retail sales comparisons also helped hold prices down for domestically manufactured goods, which advanced a seasonally adjusted 1.7 percent in August, after declining 0.9 percent in July and rising 1.8 percent in June.
“Inflation continues to be modest as long as demand on the part of the consumer isn’t there,” FTI’s Regan said.
Apparel fabric prices, also called textile mill goods, declined 0.3 percent in August from the previous month and fell 1.9 percent year-over-year. Textile product mills, which manufacture home furnishing fabrics, saw prices increase 1.2 percent month-to-month and 1.1 percent in 12-month comparisons.
Prices for domestically produced apparel were flat in August and rose 0.8 percent compared with a year earlier. Prices for women’s and girls’ apparel increased 0.1 percent month-to-month and 1.3 percent year-to-year. Men’s and boys’ apparel price were flat in August, but rose 1.2 percent in 12-month comparisons. The year-to-year increase for men’s apparel included significant increases in prices for work clothes and suits, which rose 5.1 percent and 4.3 percent, respectively, compared with a year earlier.
Deeper in the pipeline, synthetic fiber prices increased 0.4 percent in August, but declined 6 percent compared with a year earlier. Yarn prices fell 0.1 percent month-to-month and dropped 5 percent year-over-year. Prices for greige fabric declined 1.4 percent in August and 0.4 percent in 12-month comparisons.