Plus: China Car Sales Surge, U.S. Trade Deficit Narrows, German Industrial Output Increases and Initial Jobless Claims Fall.

General Motors Concludes Whirlwind Bankruptcy
“A new General Motors emerged from bankruptcy protection on Friday — far more quickly than most industry watchers had expected — as a leaner automaker pledging to win back American consumers and pay back taxpayers,” Reuters reports.

The Detroit Free Press says that the 100-year-old General Motors Corp. “was reborn Friday as General Motors Co. after a historic rush through bankruptcy that lasted only 40 days. The speed surprised even GM executives, who had said it could take 60-90 days for GM to sell its good assets through the bankruptcy process to create a new GM largely owned by the U.S. Treasury.”

Following news reports late last week about GM’s preparations to exit bankruptcy, the Wall Street Journal (subscription required) reports the automaker “kicked off a new era following its exit from bankruptcy protection on Friday” with CEO Frederick Henderson “promising to transform the automaker into a leaner and more customer-focused company.”

Henderson said the new company “will put a premium on speed, accountability and risk taking, and root out the layers of management that had hobbled decision making.”

Yet, “even after emerging from bankruptcy protection, the new General Motors still faces some of the same troubles that haunted the old one, which piled up more than $80 billion in losses during the past four years and still needs government aid to survive,” according to the Associated Press. “How does a company that has not made money since 2004 get back to turning a profit?” The No. 1 key to GM’s post-bankruptcy success will be to “win back customers from Toyota and other competitors by making cars that are more reliable than rival brands.”

Another Detroit Free Press article asks, “How do you change a company’s culture when you can’t really do much about changing the group of people in charge? That’s the intriguing challenge facing Fritz Henderson, president and CEO of the new General Motors Co., who pretty much has to make do with the same old management team as GM emerges from Chapter 11 bankruptcy.”

According to the Los Angeles Times, Henderson said “the new, smaller GM will focus on customers, cars and changing the company’s culture; it will even sell vehicles on eBay.”

Henderson, who pledged a “new beginning” for GM as it exited Ch. 11 bankruptcy on Friday, said he “expects profitability by 2011.”

China’s Car Sales Surge in June
China surpassed the United States as the world’s biggest auto market for the first half of 2009 following soaring June sales from a year earlier, according to data reported last week.

“Sales of China’s domestically made cars rose 36.5 percent year-on-year in June, another sign that government stimulus measures were driving the sector’s recovery,” Agence France-Presse reports state media as having said on Thursday.

AFP says:

Chinese car makers and their joint ventures with foreign partners sold more than 1.1 million units in June, Xinhua news agency reported, citing the China Association of Automobile Manufacturers (CAAM). In the first six months of the year, car sales increased by 17.7 percent from the same period in 2008 to 6.1 million units, while output jumped 15.2 percent to 6.0 million units, both new historic half-year highs, it said. June marked the fourth consecutive month that car sales topped 1.1 million units, CAAM said.

“China’s auto sales weakened in late 2008 as the global financial crisis hit but rebounded after Beijing launched a stimulus package with sales tax cuts, subsidies to trade in older cars and other incentives,” the Associated Press explains. “Global automakers are looking to China to help drive revenues as they struggle with falling demand in North American and other markets.”

“Toyota Motor Corp. posted its second consecutive month of double-digit vehicle sales growth in China and could surpass last year’s annual sales total, indicating that its troubles in a fast-growing market that has lifted foreign rivals are easing,” the Wall Street Journal says (subscription required). A senior Toyota sales executive last week said “the company may be able to exceed last year’s sales level of 585,000 vehicles by a relatively big margin.” The executive said the automaker has “stepped up production of cars with smaller engines — a segment China’s central government has been trying to emphasize through a sales tax cut and other measures as it pays greater attention to the nation’s fuel consumption.”

U.S. Trade Deficit Falls to 9-Year Low
“In a rare bit of good news for the economy, the U.S. trade deficit narrowed in May to its lowest point since November 1999 as American exports unexpectedly rose and imports continued to fall,” the Los Angeles Times reports.

According to the U.S. Department of Commerce on Friday, total May exports of $123.3 billion and imports of $149.3 billion resulted in a goods and services deficit of $26 billion, down from $28.8 billion in April, revised. May exports were $1.9 billion more than April exports of $121.4 billion. May imports were $0.9 billion less than April imports of $150.2 billion.

The 1.6 percent rise in exports came as foreign demand increased for industrial supplies, food and consumer items. The increase was the sharpest jump in a year. Yet domestic demand remains severely weakened in the U.S., as job cuts continue and home prices fall, crushing household wealth. Imports slipped by 0.6 percent to the lowest level in five years.

“The U.S. trade deficit with the rest of the world has plunged by 57 percent from a year ago, as imports and exports fell into a downward spiral amid the deepening global recession,” the Financial Times says. “Analysts see the smaller deficit as one of the few bright spots amid the downturn, and it has blunted some of the economy’s overall contraction.”

According to the Associated Press, economists expected the deficit to widen to $30.2 billion in May. “The better-than-expected May trade figures prompted analysts to nudge up their estimate of U.S. economic output for the second quarter,” the L.A. Times says.

“So far this year, the deficit is running at an annual rate of $350 billion, about half of the $695.9 billion deficit for all of 2008,” AP reports. “Economists believe that trend will continue as weakness in the U.S. depresses demand for imported goods.”

Earlier in the week, the International Monetary Funds (IMF) said the global economy is beginning to pull out of the recession, leading the IMF to mark up its global growth forecasts for the year. In the first upgrade of its published forecasts in two years, the IMF now foresees a 2.5 percent rebound in global growth in 2010, up from a 1.9 percent growth estimate in April.

Increase in German Industrial Output Raises Recovery Hopes
“The volume of goods leaving German factories in May increased at the fastest rate in nearly 16 years, adding to hopes that Europe’s largest economy and a G8 member is beginning to claw its way back from a deep recession,” the Financial Times reports (subscription required).

Industrial production in Europe’s biggest economy rose 3.7 percent on the month in May, although overall volumes were still 17.9 percent below levels of a year earlier, the country’s economics ministry reported last week. Industrial production had declined by 2.6 percent in April. The country now appears to be over the worst of the crisis, the ministry said in a statement.

The official data show that automobiles and car parts pushed Germany’s industrial production higher in May, “spurred by the government’s car-scrapping premium, which has raised domestic demand for vehicles,” the Financial Times says. Although Commerzbank‘s Ralf Solveen underscored stronger foreign demand for autos after the sector posted a whopping 24.2 percent gain on the month, he said it “is presumably not just due to the government incentives.” (Source: Agence France-Press)

German manufacturing orders in May rose 4.4 percent from April, at their strongest monthly rate in almost two years. According to a separate Financial Times report, the jump “surprised economists, who had expected an increase of 0.5 percent.” The May increase marked the third straight month in which orders rose — and the biggest one-month gain since June 2007. However, order volumes were still 29.4 percent below the level of May 2008.

Initial Jobless Claims Lowest Since January
The number of Americans filing claims for unemployment benefits fell in the latest week to the lowest since January, as employers cut jobs at a slower rate than earlier this year. In the week ending July 4, first-time claims for state unemployment benefits fell by 52,000 to 565,000, from a revised 617,000 the prior week, the U.S. Department of Labor said on Thursday.

Although “anticipated layoffs in the automobile industry failed to materialize as much as the government expected,” the Wall Street Journal says (subscription required), the data “don’t necessarily imply better days ahead for U.S. workers that have seen job prospects dry up by the severe recession.”

Bloomberg News reports that “companies aren’t yet hiring and economists say the jobless rate will keep rising, restraining consumer spending and muting any recovery.”

The four-week moving average, considered a more representative indicator of unemployment trends, declined 1.6 percent to 606,000 claims.

The U.S. has lost about 6.5 million jobs since the recession began in December 2007.