Auto Market Weekly Summary

Recent data point to continued weakness in manufacturing, especially in the third quarter. Globally, we are not seeing signs of improving economic activity as manufacturing languishes with ongoing trade uncertainty.

Manufacturing weakness: In the U.S., the UAW strike against GM added to weakness in the transportation sector along with declines in the aircraft industry related to Boeing. With the GM strike finally resolved after nearly six weeks, we may see a modest recovery in the U.S. in the weeks ahead.

Brexit delay: Brexit, or specifically the timing and form of Britain’s separation from the EU seems to be headed for another delay. Uncertainty still abounds, but at least we won’t have the certainty of a “hard exit” to deal with next week.

Home sales slip: Home sales improved all summer with lower mortgage rates, but sales declined modestly in September as inventories are down.

Consumer sentiment recovers:Consumer sentiment seems to be modestly recovering, and consumers increasingly think that conditions are improving for buying vehicles. And indeed, consumers have more bargaining power with inventory moving more slowly. Consumers’ views of buying conditions for vehicles increased to the best reading in more than a year.

Rising incentives: Consumers, indeed, are seeing richer incentives from manufacturers. Average new vehicle incentives may well reach a new record for October.

Looking ahead: Buckle up for a busy and possibly turbulent ride this week. We receive important data, including the first estimate of third quarter GDP, September pending home sales, personal income, spending and inflation, and October employment, consumer confidence, and new vehicle sales. The Fed meets and is likely to announce another cut to short-term rate policy by a quarter point.