GM's Restructuring Plan Approved
General Motors Co.'s restructuring plan was approved late last night, enabling the automaker to create a new company and shed its massive debt and expensive contracts. Despite the concerns of some of the 850 objectors, the U.S. bankruptcy judge approved the bankruptcy process saying that it was the only way to preserve the company's value.

"[T]he only alternative to an immediate sale is liquidation — a disastrous result for GM's creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates," Judge Robert Gerber wrote in a 95-page opinion.

As a result of the restructuring, the so-called New GM, which will be named General Motors Company, will operate the best parts of the old company, including its Chevrolet and Cadillac brands, with a less expensive workforce, smaller dealer network and much less debt, Reuters reports. The rest of the company will be named Motors Liquidation Company.

The United States Treasury has agreed to provide $60 billion in financing to the new company, giving it a 60 percent stake. The United Autoworkers union will get 17.5 percent stake, the Canadian government about 12 percent and bondholders 10 percent.

GM plans to close more than a dozen factories and shutter up to 40 percent of its network of dealerships. It also announced its exit from its joint-venture with Toyota Motors, known as New United Motor Manufacturing Inc. (Nummi), which exposed GM to Toyota's manufacturing techniques and produced Toyota's first American-made cars. The Nummi plant builds two Toyota models (Corolla sedan and Tacoma pickup truck) and GM's Pontiac Vibe. After emerging from bankruptcy, GM plans to eliminate the Pontiac brand.

The future of the Nummi plant has not yet been decided.

Loan Program Extended to Suppliers
The recently launched $25 billion government loan program to help automakers improve the fuel economy of their U.S.-built vehicles has been extended to help auto suppliers as well. According to Energy Secretary Steven Chu, additional loans will be awarded to "large and small automobile manufacturers and parts suppliers up and down the production chain" over the coming months, American Machinist reports.

As noted last week, automakers have agreed to put much of the money toward retooling plants.

Employers Shed More Jobs in June
U.S. employers shed more jobs than expected in June as the unemployment rate was little changed at 9.5 percent, the Bureau of Labor Statistics reported Thursday. Job losses plagued major industry sectors including manufacturing, services and construction.

The services industry shrank the most, declining by 244,000 positions, followed by manufacturing (136,000 decrease) and construction (79,000 jobs lost). "On the whole, this was a very ugly labor market report, and there is no amount of lipstick that can improve its image," Millan L. B. Mulraine, Economics Strategist at TD Securities told MarketWatch, which added that "unemployment is expected to rise further this year."

But the June numbers weren't all bad. Initial unemployment claims decreased by 16,000 to 614,000 the week ending June 27. The four-week moving average for initial joblessness claims also lessened by 2,750 to 615,250.

Manufactured Goods Orders Rise, Contraction Slows
New orders for manufactured goods rose three of the last four months and went up $4.1 billion (1.2 percent) in May, the Census Bureau reported on Thursday. New orders for durable goods increased by $2.9 billion (1.8 percent) to $163.4 billion, and new orders for non-durable goods increased by $1.2 billion (0.7 percent) to $184.5 billion.

Manufacturing contracted at a slower rate last month. According to the Institute for Supply Management's (ISM) latest Report on Business, June's Purchasing Managers Index registered at 44.8 percent, compared with 42.8 percent in May. Additionally, seven of 18 industries reported growth last month and, in the last two months, the production index is up 12.1 percentage points to 52.5 percent. The new orders index, however, fell back to 49.2 this month from 51.1 in May. ISM's backlog of orders index registered 47.5 percent in June, 0.5 percentage point lower than the 48 percent reported in May.

ISM index readings above 50 indicate growth, while levels below 50 signal contraction.

"The overall ISM Index has now exceeded its September 2008 level, a good sign that the impact of the global financial shock has fully played out in the manufacturing sector and the worst of the sharp decline is now behind us," Cliff Waldman, economist for the Manufacturers Alliance/MAPI, said in analysis of the ISM report. "Nonetheless, a resumption of at least modest production growth does not yet appear imminent and the data offered a number of disappointments. The key new orders component fell from modest growth to a modest contraction, and the backlog of orders fell back a bit after a sharp and encouraging surge since March."

Steel Prices Rising
Causing further speculation that the dire market conditions have bottomed out, the latest steel pricing survey by MEPS International points to the first rise in steel prices since July 2008. According to the report, capacity utilization rates for U.S. steel mills have inched up over 47.5 percent last month. "Service center activity appears to have reached a point where inventories match demand and import license applications are in an overall decline," Metal Producing & Processing says.

The rising strength of the Canadian dollar versus the U.S. dollar has also made it possible for U.S. producers to sell into Canada. Elsewhere, weak demand continues to hold down prices in Japan, Korea and Eastern Europe. Consumption in Western Europe remains weak, MEPS says, but "buyers are coming back to the market."

U.K. Economy Posts Record Contraction
The United Kingdom's economy contracted 2.4 percent in the first quarter of 2009, the deepest decline in 51 years. The Office for National Statistics (ONS) attributed the drop to the weaker output in the construction and manufacturing sectors. Indeed, construction output fell by 6.9 percent in Q1 and manufacturing fell by 5.5 percent. Additionally, the economic output shrank 4.9 percent in the first quarter compared to Q1 of 2008, the biggest year-on-year fall on record.

But despite the most recent statistics, the expectation is that April-June's official figures will be nowhere near as bad when the first estimates are published at the end of July. Already, U.K. manufacturing activity shrank at its slowest pace in June, registering a PMI of 47 from May's 45.4. That was the fourth consecutive month of improvement in the index, BBC News notes.

"Nevertheless, manufacturers still face serious obstacles and the survey fans suspicion that sustainable growth in the sector could remain elusive for some time to come," Howard Archer, chief economist at IHS Global Insight, told the BBC.