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The U.S. manufacturing sector grew faster than expected in August, but private employers unexpectedly cut jobs, showing the economic recovery still faces headwinds.

The 13th straight month of manufacturing expansion calmed fears that the U.S. economy may fall back into recession, but the drop in employment and a slump in July construction spending to a 10-year low kept concerns about slow economic growth alive.

The U.S. government is expected to report on Friday that total payrolls dropped by 100,000 in August, the third straight month of job declines, while private sector employment increased only 41,000, according to a Reuters survey.

Last month, second quarter gross domestic product data showed the economic recovery slowing as the boost from an $814 billion government stimulus package and business inventories rebuilding faded.

Full report – Reuters

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The nation’s top automakers reported disappointing sales Wednesday, resulting in the worst August for industrywide auto sales in 27 years.

According to sales tracker Autodata, U.S. new vehicle sales fell just short of 1 million vehicles, a drop of 21% from a year ago, which included Cash for Clunkers. That federal program created a sugar rush of sales by dangling an incentive of up to $4,500 in cash for buyers who traded in older gas guzzlers for more efficient models.

Industry sales also fell 5% from July levels. August sales typically outpace July, as deals become available on older models ahead of the fall introduction of new model year cars. August sales would equate to an annual sales pace of about 11.5 million vehicles.
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The country’s recession continues, as a result consumers continued to shop frugally, driving coupon use to record-setting highs.

According to Inmar, Winston-Salem, N.C., which tracks promotional transactions, coupon use in 2009 reached its highest levels since the company began tracking the numbers in 1988.

In addition, for the first time in 17 years, customers used more coupons than in the previous year, redeeming 3.3 billion packaged-goods coupons, a 27 percent increase from 2008.

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The U.S. birth rate has dropped for the second year in a row, and experts think the wrenching recession led many people to put off having children.

Births fell 2.7 percent last year even as the population grew, numbers released Friday by the National Center for Health Statistics show.

“It’s a good-sized decline for one year. Every month is showing a decline from the year before,” said Stephanie Ventura, the demographer who oversaw the report.

The birth rate, which takes into account changes in the population, fell to 13.5 births for every 1,000 people last year. That’s down from 14.3 in 2007 and way down from 30 in 1909, when it was common for people to have big families.

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Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday.

Writing in his daily briefing to investors, Rosenberg said the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains.

But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg.

Rosenberg calls current economic conditions “a depression, and not just some garden-variety recession,” and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered “euphoric response.”

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