Orders to U.S. factories unexpectedly declined 0.5% in June

Auto Sales

At the same time, automakers have been a source of strength. Toyota Motor Corp. and Honda Motor Co. are on pace for record production in North America this year, and Chrysler Group LLC is boosting output to meet demand with the industry on track for its best annual sales total since 2007.

Cars and light trucks sold at a 14.1 million annual rate in July, unchanged from the prior month, industry figures showed yesterday. It also matched the average for the second quarter, indicating little momentum as the industry heads for the best year since 2007, before the last recession.

“We think some truck buyers have been reacting to the mixed economic signals of the last few months,” Chrysler spokesman Jim Cain said on a conference call yesterday. “But recent reports of consumer confidence, home prices, and personal income were better than expected. We expect all of these factors will help release more pent-up demand.”

Factory inventories increased 0.1 percent in June, today’s report showed, while shipments slumped 1.1 percent, bringing the inventory-to-shipments ratio to 1.29 months, the highest since November, from 1.27 months.

Less Support

Manufacturing accounts for about 12 percent of the economy and has been at the forefront of the recovery that began June 2009. Cooling business investment means it may offer less support to the expansion in the second quarter.

The Institute for Supply Management’s July factory index, held near a three-year low of 49.7 reached in June, the Tempe, Arizona-based group said yesterday. A reading below 50 indicates a slowdown. Other reports suggested a global retrenching, with U.K. manufacturing shrinking the most in more than three years and euro-area factories reducing output.

Bloomberg News

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