Auto Market Weekly Summary

New-vehicle sales were essentially unchanged in November with a 12.9 million seasonally adjusted annual rate (SAAR), down slightly from 13.0 million in October. A very tight supply is limiting what can be sold, but supply has stabilized and at least is not getting worse.

The November job report was mixed. Job creation decelerated, but the unemployment rate fell, and labor force participation grew. Tight supply is limiting job growth, but wages saw solid but slightly less growth. New jobless claims are now lower than they were before the pandemic began.

Consumer sentiment trends in November were mixed. Consumer confidence is not likely to improve in December with omicron variant worries, inflation, and stock market volatility making headlines.

New-vehicle sales stall: Total new vehicle sales in November were down 16% from a year ago with one more selling day compared to last year. The November SAAR was 12.9 million, which was down slightly from the 13.0-million pace in October but down 19% from last year’s 15.9 million and 25% lower than November 2019’s 17.1 million rate.

Combined sales into large rental, commercial, and government buyers were down 21% in November from a year ago. Including an estimate for fleet deliveries into the dealer and manufacturer channel, we estimate that the remaining retail sales were down 15% from a year ago, leading to an estimated retail SAAR of 11.2 million, which was down from 11.5 million in October and down from 13.5 million in November 2020 and down from 13.7 million in November 2019.

Job picture mixed: November saw a disappointing deceleration of job gains with only 210,000 jobs created when 550,000 had been expected, but the prior two monthly numbers were revised up for a net increase of 82,000 more jobs than originally estimated.

Job creation in private payrolls slowed, and job losses in government again pulled down the totals. Professional and business services had the largest gain of 90,000. Leisure and hospitality saw a substantial slowing to just 23,000 jobs created. Auto dealers gained 200 jobs, leaving employment down 62,000 or 4.7% below the February 2020 level.

The headline unemployment rate declined to 4.2% in November from 4.6% in October. However, the Bureau of Labor Statistics reported that the rate could have been 0.1 points higher if not for misclassification due to confusion about people considered as employed but away from work. This error rate was unchanged from October, so the likely true headline unemployment rate in November was indeed lower.

The labor force participation rate increased to 61.8%, which was a high for the pandemic but still down 1.5 percentage points from February 2020. The underemployment rate, which is the broadest measure of unemployment, declined to 7.8%, which was the lowest rate yet for the pandemic, and it is now just 0.8 percentage points higher than it was in November 2019. The percentage of the unemployed reporting being on temporary layoff, as opposed to permanent, declined to 11.6% in November from 14.2% in October. That number is now 1.6 percentage points lower than it was in November 2019.

Average hourly earnings increased 0.3% in November following a stronger 0.4% increase in October. Average hourly earnings were up 4.8% from a year ago and unchanged from October.

As of November 20, 1.96 million Americans remain on traditional unemployment benefits, which are limited to at most six months of coverage. That number is the lowest for the pandemic and is now only 241,000 higher than prior to the pandemic. The broadest measure of continuing benefits declined to 2.31 million, which was a new low for the pandemic and only 204,000 higher than the 2.10 million level prior to the pandemic.

Initial claims increased last week to 222,000 in the seasonally adjusted number. The seasonally adjusted increase followed a big decline the prior week to a 52-year low that was a bit of a statistical quirk due to the timing of Veteran’s Day this year. The non-seasonally adjusted claims number declined in the latest data to a new low for the pandemic and is now lower than the weekly average in 2020 in the weeks before the pandemic began

Consumer sentiment mixed: Consumer Confidence, according to the Conference Board, declined 1.9% in November, and October’s index was revised down as well. The declines left confidence down 17.4% compared to February 2020. Confidence has declined in four of the last five months and is now at the lowest level since February.

The underlying measures of present situation and future expectations both declined with present situation declining the most. Plans to purchase a vehicle in the next six months declined to the lowest level since 2010. Plans to purchase a home also declined to the lowest level since 2010.

In comparison, the sentiment index from the University of Michigan reported a 6.0% decline in November, leaving it down 33% since February 2020.

The Morning Consult daily index saw modest improvement of 1.1% in November after having declined every month since April. The Morning Consult index is more dynamic and could reflect an improving trend in recent days not yet picked up in the other indices.

An Auto Market Report video will be published in Smoke on Cars on Tuesday, December 7. Register for the Cox Automotive Industry Insights Webcast scheduled for Thursday, January 13, at 2 p.m. EST.