Including: Slower U.S. Job Losses, Successful “Cash for Clunkers” Results and Positive Manufacturing Indicators (Worldwide).

“The most heartening employment report since last summer suggested on Friday that a recovery was under way — and perhaps gathering steam — despite the reluctance of the nation’s businesses to resume hiring or even stop shedding jobs,” the New York Times reports.

The United States economy lost fewer jobs in July than at any time since last August and the unemployment rate dropped for the first time since April 2008, the latest indication that the recession is easing.

After a 443,000 loss in June, U.S. non-farm payrolls declined by 247,000 in July, the 19th consecutive month of job losses, the U.S. Department of Labor reported on Friday. The jobless rate dropped to 9.4 percent from 9.5 percent.

In the week ending August 1, new jobless claims numbered 550,000, falling more sharply than expected and “providing another glimmer of hope that the economy may be on the road to recovery,” the Wall Street Journal reported (subscription required). “That was below the revised 588,000 new claims filed in the preceding week, and lower than the average analyst forecast of 580,000,” according to Agence France-Presse (AFP).

“Thursday’s numbers represented a return to normalcy following a volatile period in July that included two weeks of steep declines followed by two weeks of rebounds in the figures,” the Journal said on the Labor Department’s latest weekly unemployment figures.

While the pace of job losses has slowed for months now, the economy still lost a quarter of a million jobs in a single month.

The New York Times notes that the 247,000 jobs eliminated by employers last month is “a huge number by the standards of an ordinary recession, but the smallest monthly loss since last August.”

“Employers are no longer in a panic,” Ian C. Shepherdson, chief domestic economist for High Frequency Economics, told the Times. “The pressure they felt to get rid of workers in a hurry is diminishing. What we don’t see yet is enough momentum in the economy to convince companies to hire again.”

Yet while layoffs continue to permeate the labor market, more manufacturing firms are hiring compared with the first few months of 2009, according to the Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment survey for August 2009.

“In the manufacturing sector, a net total of 11 percent of respondents will add jobs in August,” according to SHRM’s latest monthly employment indices. “The 32.6 percent conducting hiring for the month represents the highest percentage of manufacturing companies that will add jobs since October 2008.”

Detroit Automakers Cash in on “Cash for Clunkers”
The nation’s automakers last week reported a burst of sales thanks in large part to the government’s $1 billion CAR Allowance Rebate System (CARS).

Nearly half the vehicles bought under the “cash for clunkers” trade-in program were made by the Detroit Three automakers. General Motors Corp., Ford Motor Co. and Chrysler Group LLC accounted for about 47 percent of the first 80,000 “cash for clunkers” sales, the Detroit News reported last week.

Ford credited the CARS program as well as new fuel-efficient vehicles for its newly reported 2.3 percent increase in July auto sales. “Excluding those gains, Ford would have reported a loss of $424 million, still narrower than a comparable loss of $1.03 billion a year earlier,” according to the Wall Street Journal (subscription required).

GM and Chrysler also benefited from the program, but their July U.S. sales were still down 19.4 percent and 9 percent, respectively. (Aside: The government expects GM to go public before Chrysler.)

Japanese automakers fared less well: Toyota reported an 11 percent tumble in year-over-year sales in July; Nissan’s fell nearly 25 percent; and Honda’s fell 17 percent, despite the government incentive program.

In a statement last week, GM’s VP of U.S. sales said that sales would catch another lift in August if the “cash for clunkers” program were approved for more funding by Congress.

The Senate last week voted to add $2 billion to the program. The additional funds “could subsidize 400,000 or more new-vehicle purchases,” according to the Wall Street Journal (subscription required).

Ford, GM and Chrysler are “weighing whether to increase output of vehicles beyond current plans, which would increase workers’ hours and possibly add some jobs at their plants and those of hundreds of suppliers,” the Journal reports. But “big sales promotions are often followed by a slump in sales.”

U.S. Manufacturing Contraction Eases
“The U.S. factory sector moved within striking distance of growth in July,” AFP said of the Institute for Supply Management’s (ISM) latest manufacturing Report on Business. The manufacturing index rose from 44.8 percent in June to 48.9 percent in July — the strongest showing since September.

The inventories index is still contracting, but the rate is slowing and it is moving in the right direction. The new export orders index shows growth following nine consecutive months of decline.

The ISM index has been improving slowly since hitting a low of 32.9 percent in December. The index was last above 50 percent in January 2008. Readings below 50 indicate contraction.

Still, the industries “that tend to be leaders in recession recovery — housing and automobiles — are struggling and could continue to weigh on demand,” the Wall Street Journal said last week (subscription required).

The Associated Press noted that the ISM report “mirrored improving readings on the industrial sectors in China and Europe, helping send global stock markets mostly higher.”

Eurozone Manufacturing Rises Fifth Month Straight
“Major European economies are bottoming out after their worst recession in decades, but evidence of recovery is still patchy,” the Wall Street Journal reported of data published on Friday (subscription required).

“Manufacturing activity in the 16 countries using the euro rose to the highest level for 11 months in July, a survey showed on August 3, in a sign of improved economic health for the Eurozone,” AFP said. “The index of purchasing managers’ activity in the manufacturing sector (PMI) rose to 46.3 points, higher than a previous estimate of 46 for the month of July in the analysis compiled by the Markit survey company.

“The new level was a major increase from June when it was at 42.6 points and marked a fifth straight monthly rise in the index,” AFP continued.

German Manufacturing Orders Up in June
“German exports jumped by a surprisingly strong 7 percent in June from May, but overall German industrial output slipped by 0.1 percent in June from a month earlier,” the Wall Street Journal reported last week (subscription required).

“The monthly rise in exports in Germany, Europe’s biggest economy, was the biggest for nearly three years and the third such rise in the last four months,” according to the Journal. “The numbers show that German companies are beginning to benefit from government stimulus measures around the world, such as in China, economists say.”

China Manufacturing at 12-Month High
“Two gauges of China’s manufacturing activity showed further expansion in July, as the recovery in the world’s third-largest economy appears to gain a surer footing, supported by domestic demand,” the Wall Street Journal reported last week (subscription required).

CLSA’s China purchasing managers index (PMI) “rose to a 12-month high of 52.8 in July from 51.8 in June.” The improvement in the PMI, which has risen more than 10 index points since the start of the year, pointed to a further acceleration in the pace of recovery of the Chinese manufacturing sector. Domestic demand was the principal driver of new order growth, while “external demand remained lackluster in July” despite rising for a second successive month.

“The independent reading confirmed official data released over the weekend suggesting that the recovery trend of the key sector is consolidating,” AFP said. “Figures published by the China Federation of Logistics and Purchasing on August 1 showed the sector expanded in July for the fifth consecutive month to 53.3, up from 53.2 in June.

Manufacturing accounts for more than 40 percent of the economy in China.

India Sees Manufacturing Growth
Although India’s exports “plunged for a ninth straight month in June,” according to AFP, “manufacturing remained healthy, reflecting strong domestic demand for cars and other goods.”

Reports showed factory output “expanding for a fourth month in a row in July as government stimulus and interest rate cuts has spurred domestic demand.” And the figures, “on top of a better-than-expected corporate earnings season,” were “the latest sign Asia’s third-largest economy may be on the mend.”