Business digest, Feb. 2

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Auto sales start the year strong

U.S. auto sales are off to a strong start this year, continuing their brisk pace from late 2011.

Chrysler had its best January in four years. Toyota and Honda were back in the game, getting boosts from important new vehicles. Volkswagen, which wants to aggressively expand in the U.S., reported big increases. The only loser among the major automakers was General Motors Co., whose sales fell 6 percent from a strong January last year.

Sales of cars and trucks rose 11 percent to 913,287 in January, kicking off what is expected to be the strongest year for the industry since the recession. Jesse Toprak, vice president of industry trends for TrueCar.com, said demand is growing as the economy improves.

"For the first time in several years, we are starting the year off with a warm and fuzzy feeling," Toprak said.

EU blocks exchange merger

The European Union on Wednesday blocked the Deutsche Boerse's planned merger with NYSE Euronext, a $10 billion deal that would have created the world's largest financial exchange operator.

The European Commission, the EU's executive body, said it was ruling against the merger because the combined exchange would have controlled 90 percent of the trading in European derivatives. It said that dominance of that market would have made it almost impossible for competitors to offer rival trading systems.

Index signals expansion

Manufacturing in the U.S. grew in January at the fastest pace in seven months, a sign the industry will lead the U.S. expansion early this year.

The Institute for Supply Management's manufacturing index climbed to 54.1, less than projected, from 53.1 in December, the Tempe, Ariz.-based group's report showed Wednesday. Figures greater than 50 signal expansion.

Construction spending up again

Builders increased their spending in December for the fifth consecutive month, ending a weak construction year on a hopeful note. Spending on construction projects rose 1.5 percent in December after a revised 0.4 percent gain in November, the Commerce Department said Wednesday. That pushed spending to a seasonally adjusted annual rate of $816.4 billion, the highest level in 20 months. Still, spending on all construction projects for 2011 was just $787.4 billion. That's 2 percent lower than the previous year.

Job gains less than expected

Companies added 170,000 workers in January, reflecting job gains in services and at small businesses, according to a private report based on payrolls. The increase was less than forecast and followed a revised 292,000 rise the prior month that was less than previously reported, the report from ADP Employer Services showed Wednesday.

American Airlines aims to cut 13,000 jobs

The parent of American Airlines wants to eliminate about 13,000 jobs — 15 percent of its workforce — as the nation's third-biggest airline remakes itself under bankruptcy protection.

The company aims to cut labor costs by 20 percent under bankruptcy protection, and will soon begin negotiations with its three major unions. Some management jobs would also be cut.

AMR also proposes to end its traditional pension plans. The move has been strongly opposed by the airline's unions and the U.S. pension-insurance agency.

AMR Corp. CEO Thomas W. Horton said Wednesday that the company hopes to return to profitability by cutting spending by more than $2 billion per year and raising revenue by $1 billion per year.

AMR lost $884 million in the first nine months of 2011, and on Tuesday it disclosed a $904 million loss for December alone. It has lost more than $11 billion since 2001.

"We are going to use the restructuring process to make the necessary changes to meet our challenges head-on and capitalize fully on the solid foundation we've put in place," Horton said in a letter to employees.

Microsoft ads slam Google data policy

Microsoft Corp. slammed search rival Google Inc. with full-page ads Wednesday, saying that recent changes at Google that allow it to internally merge the data it collects on user activity across services such as YouTube and Gmail are meant to allow advertisers to better target customers.

Google has touted the overhaul it announced last week as a simplification of detailed but obtuse policies and a way to provide a better user experience.

Microsoft offered up its own Web-based alternatives, saying for instance that users of its free email service, Hotmail, don't have to worry about the content of their emails being used to help target ads.

"Every data point Google collects and connects to you increases how valuable you are to an advertiser," Microsoft says in the ad.

In response, Google published a blog post in which it rebutted what it called "myths" about its new privacy policy, saying, "Our privacy controls have not changed. Period."

Right-to-work law signed in Indiana

Gov. Mitch Daniels made Indiana the nation's 23rd right-to-work state by signing a bill exempting nonunion employees from paying dues when working alongside their unionized colleagues.

Daniels enacted the measure Wednesday about four hours after the state Senate gave it final passage on a 28-22 vote, ending a contentious debate over a law that Republicans view as a cost- cutting, job-creating tool, while Democrats call it a wage- lowering union buster.

"This law won't be a magic answer but we'll be far better off with it," Daniels said in a statement. "No one's wages will go down, no one's benefits will be reduced, and the right to organize and bargain collectively is untouched and intact."

— From wire reports

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