September 05, 2007
August auto sales
August light-vehicle sales give us an early indication of how the real side of the economy is holding up under the financial turmoil that began August 9. And the results are not too bad, considering.
August sales of cars manufactured in North America were down 3.7% from August 2006, but up 13.7% from July's dismal numbers:
Domestic light truck sales were up 2.9% year-to-year and 16.8% month-to-month:
Adding together all light vehicles sold in the U.S. (cars and light trucks, domestic and foreign), the August 2007 number was basically the same as August 2006 and up 12.9% from July:
Automobile sales can be one of the first things we see shift in response to a change in consumer psychology, and the most recent numbers for the University of Michigan's index of consumer sentiment show a worrisome plunge:
So none of us would be surprised if we learned that the worries on Wall Street have become big concerns on Main Street as well. But the August data for automobile sales suggest that hasn't happened.
At least, not yet.
Posted by James Hamilton at September 5, 2007 04:34 PMdigg this | reddit
BEA seasonally adjusted annual rate auto sales:
Moreover, this morning the major retailers are reporting very good august sales.
In addition initial unemployment claims are not changing significantly.
If the housing and/or credit issue are spreading
to the rest of the economy it sure is not showing up in the data.
The Fed is going to have to find some other excuse to cut rates this month --maybe the employment data will be bad.
Posted by: spencer at September 6, 2007 06:27 AM
It appears that rumors of the consumer's demise have been greatly exaggerated.
Posted by: Steve at September 6, 2007 08:02 AM
Fed guys (so far the gals have been "no comment") have said that the data are not sufficiently current to be useful, and are generally talking in such a way as to allow for an ease. Every Fed official who has addressed the issue today and yesterday has noted an increased risks to growth from tighter credit. If, as Fed officials said up till now, monetary policy was appropriate, then if risks to growth are up, monetary policy may be inappropriately tight.
I was unconvinced by all the investor and builder whining for an ease, but when Fed guys allow money markets to price in strong odds of an ease without protest, then we have reasonably good odds of an ease. There has been some talk of the risk of overreacting, so maybe Greenspan's propensity to address any problem with a 50 bp ease right out of the gate is a thing of the past. We'll see, maybe.
Posted by: kharris at September 6, 2007 12:02 PM
It's always a good idea to carry a grain or 2 of salt with you when you visit the consumer sentiment data. It's one thing for people to say they're worried, pessimistic, scared or whatever. It's a different matter for them to actually change their behavior.
Posted by: psummers at September 6, 2007 12:09 PM
What? Steve, these "auto sales" were not impressive at all. Nor were the so called "robust" retail sales. July wasn't the horribleness it was made out to be either.
Stupid quote if there is one. Credit crunches historically take 6-12 months(notice people tie that to equities) in length to hit the economy.
Posted by: dryfly at September 6, 2007 12:56 PM
I don't think the Fed has decided on what they're going to do yet. The fact that they haven't leaned on the market's pricing in of an easing seems to suggest they're at least open to that and might even be leaning toward that.
If they were completely against a cut, they would definitely be out in force seeking to get that point across before the 18th.
Posted by: Steve at September 6, 2007 01:36 PM
Thanks for those graphs JDH, and I must say I'm surprised by the domestic light vehicle sales. Did fleet sales figure into this not-so-bad picture? I was misled by Ford numbers, maybe.
Maybe there was a typo like this:
Or maybe it was this:
Posted by: calmo at September 6, 2007 10:18 PM
With those devastating job numbers today, I wonder if the official auto sales report will be revised...like the July job numbers for instance. It does look like the industry auto reports were more accurate than the official reports, no?
Posted by: calmo at September 7, 2007 07:38 AM
Calmo, Motor Intelligence has similar (but not identical) aggregate numbers to the Wards data I report, and the MI data are also broken down by company. I believe these MI numbers are consistent with your links, but let us know if you see any big discrepancies. Don't forget that GM sells as many cars as Ford and Chrysler combined, so if GM is up and Ford and Chrysler are down year-to-year, it comes out as a near wash in the aggregates. Also, the stronger numbers I report come from comparing August with July rather than August '07 with August '06.
Posted by: JDH at September 7, 2007 08:27 AM
Thanks JDH, (esp for "comparing August with July rather than August '07 with August '06") the GM anomaly...is that associated with fleet sales, a claim that is consistent with GM's forecast of weakening sales in the next few quarters (as opposed to forecasting a sustained upturn)?
Posted by: calmo at September 7, 2007 10:13 AM
You all can thank me for the good numbers. I just bought a new Saab 9-3.
I don't think that GM made much money off me. There was a $4500 rebate, some bonus cash for cap cost reduction, and I got the supplier discount.
Interestingly, my first choice was a 2007 Cadillac CTS, but they were totally gone from the dealers in the Chicago area. I was also interested in the Chevy Impala, and they were also very scarce. Judging from how many I see on the road, I believe that they are selling very well.
Posted by: Buzzcut at September 10, 2007 09:20 AM