DETROIT — June car sales were bad — 28% lower than a year ago — but industry executives say they think the market has hit bottom and will continue to inch up as the year progresses.
June car sales were bad — 28% lower than a year ago — but industry executives say they think the market has hit bottom and will continue to inch up as the year progresses.
It was the first month since September that sales have fallen less than 30%.
With the government's cash-for-clunkers rebate program set to begin sometime in July and signs that consumer confidence is starting to recover, it's possible the industry actually hit its low point in February.
June sales were at a 9.63 million annualized rate, meaning if sales every month were the same adjusted pace as in June, they'd total 9.63 million at the end of the year. In February, the annualized rate was 9.12 million.
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"What we're seeing is stabilization," says Al Castignetti, vice president of Nissan sales for Nissan North America. "We're starting to see better traffic levels, better sales numbers, better quality of traffic, and we're starting to see the banks begin to loan money again a little more aggressively."
In a sea of losers, Ford was the strongest major automaker in June simply because its sales were down just 10.7%. Chrysler, which set off a fire sale earlier in the month when it forced 789 dealers to close their doors, posted a 41.9% decline. General Motors was down 33.4%, close to Toyota's decline of 31.9%.
Ford outsold Toyota for the third month and put Toyota behind its domestic competitor for the year. Still, Ford's Mustang was outsold by GM's Chevy Camaro: 9,320 for the Camaro compared with 7,362 for the Mustang. The newly relaunched Camaro sold twice as fast as GM was expecting, says Mark LaNeve, GM's vice president of sales, service and marketing.
Some had forecast that the market would top an annualized rate of 10 million in June, but LaNeve says he thinks the cash-for-clunkers bill just signed into law may have prompted some people to postpone car buying until the program starts up. It will give buyers who trade in an older, less-fuel-efficient vehicle up to $4,500 in rebates to buy a more-fuel-efficient model.
The bill "put some people on the sidelines in the last week of the month," LaNeve says. Sales "softened up the last week of the month, which is traditionally the week with the most sales."
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Apple CEO Steve Jobs at Work Again
Steve Jobs is back to work as the head of Apple (AAPL).
After a six-month medical leave, Jobs will be working from his Cupertino, Calif.-based office a few days a week and from home the other days, Apple's chief spokesperson Steve Dowling told many media outlets today.
Apple successfully launched the iPhone 3G S this month and the company appears to have been well-run by its chief operating officer Tim Cook. Even so, there's no question that folks outside the company view Jobs as the creative genius behind such hit products as the iPod. His long-anticipated return also quells uncertainty --something investors despise.
"Having Steve Jobs back means they got the visionary back," Piper Jaffray & Co. analyst Gene Munster told Bloomberg News. Munster said investors could be confident about Apple's three- to five-year plan with Jobs back at the helm.
Apple had said in January that Jobs would return at the end of June. Last week, CNBC reported that Jobs was seen at Apple's offices. Also in January, Dowling told Bloomberg News that there is a succession plan in place for Jobs, who is 54. Dowling didn't comment on the plan, calling it "confidential for obvious reasons." The company hasn't elaborated on those plans since.
Apple, known for its secrecy, also hasn't discussed Jobs' health following his recent liver transplant in Tennessee. But doctors have said he is recovering well. As long as his health is good, investors will be pleased to have Jobs back at work.
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GE CEO Wants More US Manufacturing
BIRMINGHAM, Michigan - The United States should aim to have manufacturing jobs comprise at least 20 percent of total employment, about twice what it is now, General Electric Co. Chairman and CEO Jeffrey Immelt said Friday.
Speaking to the Economic Club of Detroit, Immelt outlined what he called an American industrial renewal driven by emphasis on manufacturing and exports, investment in new technology and research and development, innovations in clean energy and affordable health care.
The U.S. has faltered as it has moved toward a service- and consumption-based economy, Immelt said. He singled out financial services, which he said comprise 45 percent of earnings of companies on the Standard & Poor's 500 index, up from 10 percent a quarter-century earlier.
American manufacturing can be reinvigorated through investment in research and development, infrastructure and training, and by fostering public-private partnerships, Immelt said.
There is nothing "predestined or inevitable about the industrial decline of the U.S., if we as a people are prepared to reverse it," he said.
"We would do much better to observe the example of China. They've been growing fast because they invest in technology and they make things. They have no intention of letting up in manufacturing in order to evolve into a service economy.
"They know where the money is and they aim to get there first," Immelt said. "America has to get back in that game."
Earlier Friday, Immelt announced GE is developing a
$100 million research and development facility in Wayne County's Van Buren Township, 25 miles (40 kilometers) west of Detroit. About 1,200 scientists and engineers initially will be hired to develop manufacturing technologies for GE's renewable energy, aircraft engine, gas turbine and other products.
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U.S. existing home sales continue to rise 
The mini-positive trend in the U.S. housing sector continues. Existing home sales rose 2.4 percent in May to a seasonally adjusted annual rate to 4.77 million units, the National Association of Realtors announced Tuesday.
Further, it was the first back-to-back monthly increase in existing home sales since 2005 -- a modest, but much-needed accomplishment for a sector that's suffered its deepest and longest contraction in more than 25 years.
Economists surveyed by Bloomberg News had expected May existing home sales to total a 4.85-million-unit annualized rate. In April, existing home sales increased 2.9 percent to a 4.68-million-unit rate. However, existing homes are still down 3.6 percent in the past year.
Inventories fall
Equally significant, inventories fell in May, something that will gladden the hearts of home builders and realtors alike. Inventories fell to a 9.6-month supply in May at the current sales pace, down from 10.2 months in April.
Also in May, single family home sales rose 1.9 percent and condominium/co-op sales increased 6.1 percent.
Lawrence Yun, NAR chief economist, argued that public policy is helping to nudge first-time buyers into making a purchase. "Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates," Yun said. "First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory."
However, the national median sales price for an existing home is still showing the effects of the recession, with the price falling 16.8 percent to $173,000 on a year-over-year basis. Median home prices by region were as follows: Northeast, down 12.5 percent to $243,600; Midwest, down 10.4 percent to $145,800; South, down 9.9 percent to $157,400; and the West, down 30.6 percent to $197,700.
Views it as a small victory
Zach Pandl, an economist for Nomura Securities International in New York, said he's encouraged by improving conditions in the existing home sales segment, but investors need to maintain a proper perspective.
"We're seeing some early signs of stabilization in home demand but it's important to emphasize the level of sales remains extraordinarily low," Pandl told Bloomberg News Tuesday. "Housing investment is likely to stop being a drag on growth some time this year but, given the weakness in sales, it's unlikely to give positive contributions any time soon."
Economic Analysis: NAR Economist Yun added that he's sticking with his forecast of 5 million existing home sales for the year. That may prove to be a slight overprojection, but given the back-to-back gains, in the spirit of "looking at the glass as half-full," we'll give him the benefit of the doubt. Further, the key determining variables for existing (and new) home sales remain job creation and mortgage rates: job losses must stop and interest rates must remain stable to maintain the modest positive trend in the housing market. That said, we can see the slight uptrend sales impact of lower prices in the May data.
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Fed Expected to Stand Pat on Economy 
WASHINGTON - With the recession easing, Federal Reserve policymakers are unlikely to launch any major new efforts to revive the economy when they meet this week. Instead, Fed Chairman Ben Bernanke and his colleagues, wary of overdoing the stimulus medicine and fanning inflation later, are expected to stand pat, economists say.
The Fed has taken unprecedented steps to try to lift the country out of recession. They include a bold effort announced in March to plow $1.2 trillion into the economy in an attempt to lower interest rates and spur more spending by Americans.
"There are a lot of good signs that an economic recovery could get under way later this year, and with inflation currently low, the Fed for now has the luxury of sitting back and watching this recovery unfold," said John Silvia, chief economist at Wachovia .
Home sales have firmed, housing construction posted a gain last month, layoffs are slowing and consumer spending is showing signs of stabilizing.
When they open a two-day meeting Tuesday, Fed policymakers are widely expected to hold a key lending rate to banks at a record low near zero and repeat a pledge to hold rates there for "an extended period."
Most economists say that means the Fed will keep its targeted range for its bank lending rate between zero and 0.25 percent through the rest of this year and probably into part of next year to help brace the economy.
Analysts generally think the economy in the current April-to-June quarter is still declining — perhaps at a pace of 1 percent to 3 percent — but not nearly as much as it had been. The economy sank at a 6.3 percent rate in the final quarter of 2008 and at a 5.7 percent pace in the first quarter this year. It was the worst six-month performance in 50 years.
Bernanke has predicted the recession will end later this year. Some economists say the economy will start growing again as soon as the July-to-September quarter as the Fed's actions so far, along with the federal stimulus of tax cuts and increased government spending, take hold.
Risks to the outlook, however, abound.
Some economists and Wall Street investors have worried that a recent run-up in rates on mortgages and Treasury securities, if prolonged, could choke off prospects for an economic recovery. Some of those fears were eased last week, when rates on 30-year mortgages dipped to 5.38 percent after a string of weekly increases.
Earlier this month, Bernanke said higher rates on mortgages and longer-term Treasury securities seemed to reflect worries about the United States' huge budget deficits, as well as optimism about the economy. He said it also signaled a gradual shift by investors away from the safe haven of U.S. bonds, reversing a pattern seen in the depths of the recession.
It's possible the Fed could decide this week to boost its purchases of mortgage-backed securities and government debt, to try to drive down rates on mortgages and other consumer debt. Most analysts doubt that will happen, but economists predict the Fed will leave the door open to further action if economic conditions were to deteriorate.
"Some Fed members worry additional action could be counterproductive and actually push long-term interest rates higher because investors will fear that the Fed's actions could lead to runaway inflation down the road," said Mark Zandi, chief economist at Moody's Economy.com.
"Others think the recent rise is just a normalization of rates, reflecting investors' beliefs that the economy is heading in the right direction and that the rise won't do significant damage."
Rising unemployment, tanking home values and cracked nest eggs could force consumers to go back into hibernation again. Economists don't think that will happen, but they can't rule it out, either.
Even after the recession ends, the recovery is likely to be tepid. The nation's unemployment rate — now at 9.4 percent — is expected to keep climbing into 2010 and to hit 10 percent this year. Some say it could rise as high as 10.7 percent or 11 percent by the summer of next year before it starts to decline. The highest rate since World War II was 10.8 percent at the end of 1982.
"The Fed has to walk a fine line right now" to make investors and the public feel confident policymakers will administer the right dose of medicine to heal the economy but not so much as to cause an overdose, said Richard Yamarone, economist at Argus Research.
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