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Auto purchases increased 0.7% last month, the highest rate in the past half-year. The "cash for clunkers" program is credited with the spike, particularly given that other retailers continued to struggle.
Not including the auto sector, retail sales were up only 0.1% in July. So, the car manufacturers are getting their bump, but to call a recovery would still be premature. It's even gotten to the point where dealers are running out of inventory.
Car and truck sales reached an annualized pace of 11.2 million in July, the best rate since September, and the extension of the program is expected to increase its impact on the auto companies and the economy as a whole.
The implications have been evident on auto payrolls. General Motors added 28,000 employees in July, its top month in the past 10 years. Meanwhile, retailers slashed 44,000 positions, more than twice the amount cut in June. Manufacturing output rose 0.4%, the first up-tick since October.
The question that remains is the sustainability of the auto manufacturers' pace. If the "cash for clunkers" program actually has a knock-on effect to other areas of consumer behavior, it could be more than just a short-term measure for embattled auto manufacturers.
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