Last week, data on housing, new vehicle sales and job creation reports came in weaker than anticipated though there were some mixed signals as well.
Housing mixed signs: Housing has been weak, but higher permitting in January suggests at least slightly more new home activity this spring.
Slower job growth, wage gains: Job creation slowed dramatically in February, yet unemployment declined, and wage growth accelerated. Slower job growth should lead to lower wage gains later in the year. Slowing employment and wage growth are consistent with the slower economic growth expected.
Weak retail vehicle sales: New vehicle sales in February were again weaker than expected, especially in retail. Record prices with only marginal growth in incentives are not enticing consumers, but used vehicle sales improved. Tax refunds are slower and lower, but used sales and price trends suggest that the used car market remains strong.
Average incentive spending increased by 2 percent in February over January, but it wasn’t enough to keep inventories from growing again. The days’ supply for February was 77, up four days year-over-year. Car day’s supply came in two days lower than last year, but truck day’s supply was up six days.
Looking forward: This week belated government data comes in regarding retail sales for January, February inflation and March preliminary consumer sentiment. We publish the Cox Automotive’s Q1 Dealer Sentiment Index today. An update to the tax refund story will publish on Tuesday, so check back to see how that story is shaping up.