American consumers were back in buying mode in August.

A report Tuesday by the U.S. Commerce Department says retail sales rose 2.7 percent in August, the biggest jump in more than three years.

Commerce officials says the increase was led by a surge in automobile sales - attributed to the government's so-called "Cash for Clunkers" program that provided cash incentives to people to trade in old cars for new and more efficient ones.

Even without auto sales, the report says purchases increased more than one percent.

Another Commerce Department report finds U.S. businesses reduced their inventories for the 11th consecutive month in July due to a modest increase in sales.

Some economists see both reports as indications that the United States is pulling out of its worst recession since World War II.

Two other reports released Tuesday are providing additional information about the potential recovery.

The New York branch of the Federal Reserve, the U.S. central bank, says manufacturing in its region grew at the fastest pace in about two years in September.

However, the U.S. Labor Department says prices paid to U.S. factories, farmers and other producers jumped 1.7 percent in August, led by a sharp increase in energy prices.

The increase could further reduce profits for already struggling companies, since they will have a hard time passing along the costs to consumers. Despite last month's increase in retail sales, U.S. consumers have been generally wary about spending money.

Some information for this report was provided by AFP, AP and Reuters.