‘Cash for Clunkers’ scheme boosts US industrial output

| August 16, 2009 | 0 Comments

Demand for cars and carmakers has resulted in a rise of 0.5% in US industrial output for the month of July - boosted by the US Government’s Car Allowance Rebate System (CARS), branded the “cash for clunkers” scheme.

The rise was the first in 9 months and exceeded analysts forecasts.

The rise in industrial output was also due to the reopening of plants at manufacturers such as Chrysler and General Motors.

In the meantime, the Labor Department revealed that the Consumer Price Index was unchanged for the month but fell 2.1% over the last year - the worst drop since 1950.

The fall reflects the turnaround of oil prices, which have fallen considerably since their peak of $147 a barrel in July last year.

However, analysts have read both sets of figures as tentative sings that the world’s no.1 economy may be picking up.

“It’s something to be optimistic about, it’s another sign that we may be turning a corner,” said Terry Morris at National Penn Investors Trust company of the inflation data.

Earlier this month, it was revealed that 247,000 jobs were lost in July in the US - much less than analysts had forecast.

The decline meant the unemployment rate dropped from 9.5% in June to 9.4% in July - the first fall since April 2008

However, the Commerce Department revealed a slight fall in retail sales last week. The fall of 0.1% for July followed two months of gains.

Analysts described the figures as disappointing as they had been expecting a rise of 0.7% in overall sales last month.

Tags: cash for clunkers, consumer price index, , , ,

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