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Germany raised the pressure on General Motors on Friday to choose a buyer for its Opel unit, with Economy Minister Karl-Theodor zu Guttenberg telling the U.S. carmaker he expected a “fundamental decision” next week.

Speaking on ARD television, Guttenberg said there were offers for Opel which were ready to be signed and that it was time for the U.S. parent to “give in.”

Frustration with GM is mounting in the German government, which has come out strongly in favor Canadian auto parts group Magna’s bid for Opel.

Sources have told Reuters that some members of the GM board want to keep Opel instead and if that does not work would prefer to sell to Belgian-based financial investor RHJ International. Guttenberg said talks were focused on finding an investor solution for Opel, suggesting Berlin does not expect GM to keep the carmaker.

The government has said it would only provide billions of euros in aid to Opel if GM selects Magna. There are big questions about whether GM could come up with the funds it would need if it decided not to sell its European unit.

The head of GM Europe, Carl-Peter Forster, told Die Welt newspaper in comments released on Thursday that he believed Magna was most likely to win a bidding battle for Opel but that the carmaker could also thrive under the ownership of its U.S. parent.

“The greatest probability would be, for me, Magna, since all prerequisites are fulfilled, the contracts have been negotiated to their conclusion, and the financing is there,” he said in Friday’s edition of the German paper business cards.

GM sources said Forster, whom Magna has requested to stay on to run Opel should it win the deal, was not speaking for management.

The sources said a group of senior executives, including vice chairmen Bob Lutz and Tom Stephens favor either the RHJ bid or, increasingly, no sale at all.

Opel, which employs about 25,000 people in Germany, has been on the political agenda for months in Europe’s largest economy, which holds a federal election on September 27.

In an interview published on Friday, Chancellor Angela Merkel said she still expected Opel to be hived off from GM.

“We have no indication that GM is moving away from an investor-based solution,” Merkel told the Westdeutsche Allgemeine Zeitung daily.

Opel’s senior labor leader, Klaus Franz, on Thursday told General Motors that his workforce would not pitch in to reduce about $1.2 billion in costs if Detroit retained control of the European unit.

(Writing by Dave Graham, editing by Will Waterman)

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New applications for jobless benefits in the United States fell last week, while activity in the services sector was at its strongest in nearly a year in August, suggesting a modest recovery from recession had started.

A Labor Department report on Thursday showed initial claims for state unemployment insurance benefits fell 4,000 to a seasonally adjusted 570,000 last week. However, the four-week moving average for new jobless claims, considered a better gauge of underlying trends, rose 4,000 to 571,250.

Separately, the Institute for Supply Management said its non-manufacturing index climbed to 48.4 in August, the highest since September last year, from 46.4 in July. Its employment gauge improved to 43.5 from 41.5 in July.

“We are seeing signs that the labor market is stabilizing. It would be better to see that number come down more. That would offer confirmation that the economy is turning the corner and doing better,” said Gary Thayer, macrostrategist at Wells Fargo Advisers in St. Louis, Missouri.

U.S. stock indexes fell, while government bond prices were little changed.

Economic data continues to indicate a recovery from the worst recession since the Great Depression of the 1930s is under way, but anemic consumer spending as a result of high unemployment has raised fears the turnaround will be tepid.

While the pace of layoffs has slowed considerably from early this year, companies are reluctant to start aggressively hiring, waiting for a strong signal the recovery will be sustained. The economy slipped into recession in December 2007.

The government’s closely watched non-farm payrolls report for August, due on Friday, is expected to show employers shed another 225,000 jobs last month after eliminating 247,000 in July.

“The lack of job creation remains a big headwind for cash-starved and credit-constrained consumers, and thus a major impediment for the fledgling recovery,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.

Highlighting companies’ reluctance to expand payrolls even as the economy’s outlook improves, the number of people on long-term unemployment benefits rose 92,000 to 6.23 million in the week ended August 22, the Labor Department data showed.

However, the four-week moving average fell 27,250 to 6.22 million. The insured unemployment rate, which measures the percentage of the insured labor force who are jobless, inched up to 4.7 percent in the week ended August 22 from 4.6 percent.

ISM’s index’s business activity component rose to 51.3, up from 46.1 in July. The August reading was its first above 50 since last September.

The services sector represents about 80 percent of U.S. economic activity and includes businesses such as banks, airlines, hotels and restaurants.

(Additional reporting by Ellen Freilich in New York; Editing by Chizu Nomiyama)

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Planned layoffs at U.S. firms fell in August, suggesting less stress on the labor market and improvements in consumer spending and the broader economy in the coming months, a report released on Wednesday showed.

Planned job cuts announced by U.S. employers fell to 76,456 last month, down 21 percent from 97,373 in July, according to a report released by global outplacement consultancy Challenger, Gray & Christmas, Inc.

While the rate of layoffs has slowed, the cumulative number of job cuts has climbed to 1.07 million from January through August, 60 percent higher than the same period a year earlier.

But August’s layoffs were the second smallest monthly total so far in 2009, the firm said. It also marked the sixth time in the past seven months that job cuts fell from the prior month.

“That does not necessarily mean that there will be a sudden surge in job creation as 2010 gets underway, but we will at least be heading in the right direction,” said John Challenger, the firm’s chief executive, in a statement.

The planned job cuts in August were led by government and non-profit sector, which announced 38,586 layoffs, as it has struggled with falling tax receipts.

While the federal government has been one of the few employers creating jobs, the U.S. Post Office said last month it aimed to reduce 30,000 or roughly 4.6 percent of its payroll mostly through early retirement buyouts.

“Fortunately, the job cuts by the post office are not indicative of a coming surge in federal government downsizing. Rather, the cuts are tied to falling mail volume as more Americans rely on e-mails,” Challenger said.

An encouraging sign is job cuts outside the government are steadily shrinking. If monthly job cuts stay near or below 100,000, “it will be a strong indication that the economy and job market are improving,” he said.

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U.S. retailers are likely to get an “incomplete” mark for the key back-to-school season when they report August sales this week, as a later Labor Day holiday is expected to pull some sales into September, pressuring August results.

Retailers that report August sales — a group that does not include industry giant Wal-Mart Stores Inc — are expected, on average, to post a decline of 3.9 percent in sales at stores open at least a year, according to Thomson Reuters data.

Investors are looking for signs that consumers, who account for about 70 percent of U.S. economic activity, are loosening their purse strings after pulling back during the worst recession since the Great Depression.

“It’s going to be watched very closely,” Ken Perkins, president of Retail Metrics Inc, said of August sales data. “Did anyone go out and start picking up their discretionary spending here?”

Retail stocks have rallied sharply since early March, helped by cost cuts that helped offset falling sales. The Standard & Poor’s Retail index is up more than 56 percent since early March, though some analysts say retailers will need to start showing sales improvement for the stocks to rally much further.

WHEN IS LABOR DAY?

The sales view is likely to be distorted by the shift of Labor Day — which falls on the first Monday in September — to September 7 in 2009 from September 1 in 2008. That shift means seven more pre-Labor Day selling days, including the entire holiday weekend, will be in the September sales reporting month this year. Last year, the Saturday of Labor Day weekend fell in August.

“A lot of people traditionally wait for that Labor Day weekend to do their back-to-school shopping,” Perkins said, estimating that a couple of percentage points of sales growth could be lost this August instant payday loan.

But some of the impact from the later Labor Day will be muted by a shift of some states’ sales tax “holidays” into August from July, analysts said.

Overall, a better look at the back-to-school season — often seen as a harbinger of the Christmas holiday selling season — will be seen by combining August and September sales this year.

“There are some tricks of the calendar this year, with variations in tax holidays and a delayed back-to-school season, so there may be volatility in August sales and September” sales, Lawrence Creatura, a portfolio manager at Federated Investors, said.

On Tuesday, the International Council of Shopping Centers and Goldman Sachs said sales for the week ended August 29 were down 0.5 percent from the previous week and down 0.7 percent from a year earlier.

ICSC forecast a decline of 3.5 percent to 4.0 percent for the month of August.

Still, there are some signs of brighter consumer sentiment and economic improvement, which could help sales going forward. The U.S. economy shrank less than expected in the second quarter, and fewer workers filed new claims for jobless benefits last week, among the latest signs that the economy could be shrugging off the recession. [nN27303398]

“If there is an uptick, then the holiday season could have a chance at a modest season, not just an absolutely terrible one like (retailers) had last year,” Perkins said. 

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