Car sales for July in the U.S were better than expected. That good news was followed immediately by Toyota's (TM) better-than-expected earnings, which were topped off by an up-beat forecast.

The world's largest car company lost $816 million last quarter, which was better than expected. The firm said its aggressive costs cuts were responsible for much of the improvement. Going forward Toyota anticipates that improved demand, driven to a large extent by government stimulus programs, will lead to a better year than expected. The company lifted its full-year sales target to 6.6 million vehicles from 6.5 million.

Toyota's results are encouraging because of the scope of its business. It has huge operations in America, Europe, Japan, and China. For the company to begin to see improvements in its results likely means that the recovery of the auto markets is more speedy that expected, and also more widespread geographically.

Because the car industry is such a large part of the economic fabric of almost every country in the world, Toyota's forecast is not a bad indication that the entire global economy is indeed on the mend.

Douglas A. McIntyre is an editor at 24/7 Wall St.