Auto Market Weekly Summary

Highlights

• Inflation growth slowed down in April, with core CPI hitting its lowest reading since April 2021.
• April’s retail sales were flat, with the automotive underperforming the overall market.
• Residential construction was mixed in April, with multifamily starts surging and single-family starts slightly declining.

Inflation Trends

Headline inflation growth showed signs of slowing down in April, according to the Consumer Price Index (CPI), providing relief to the financial markets:

• Headline Inflation: The headline aggregate measure of inflation increased by 0.3%, slightly below the expected 0.4%.
• Core CPI: The core CPI, which excludes Food and Energy, also rose by 0.3%, month over month, as anticipated. Housing inflation decelerated to 0.2%, while apparel saw a notable increase of 1.2%.
• Year-over-Year Decline: Core CPI decreased to 3.6%, the lowest since April 2021, with overall CPI dropping to 3.4% from 3.5% in March. We have seen several readings lower than that over the last year, but the move down in April represented a return to inflation moving in the right direction.

Retail Sales Performance

Retail sales for April were flat, falling short of expectations:

• Consumer Spending: Overall consumer spending in April remained unchanged, contrary to the anticipated 0.4% growth.
• Category Performance: Gas stations and clothing stores experienced the largest gains, while ecommerce and sporting goods, hobby, book, and music stores saw significant declines. The auto sector underperformed the rest of the retail market, which was up 0.2%, with motor vehicles and parts down 0.8%.
  
  Transportation services saw another strong increase of 0.9%, but that represented a deceleration from 1.5% in March. Motor vehicle insurance increased 1.8% and was the cause of the transportation increase.
• Year-over-Year Change: Nominal retail sales increased by 3.0%, down from an upwardly revised 3.8% increase in March. Adjusted for inflation, sales declined by 0.3% – both month over month and year over year.

Residential Construction Insights

Residential construction activity in April was mixed and weaker than expected:

• Permits: Overall permits fell by 3.0%, against the expected 0.9% increase. Multifamily permits dropped significantly, while single-family permits saw a modest decline. Permits have declined in total for two straight months, and single-family permits have declined for three straight months as higher mortgage rates to start 2024 have pushed off any hope of a housing recovery.
• Construction Starts: The seasonally adjusted annualized rate of starts increased by 5.7%, below the expected 7.6%. The increase in starts was all in multifamily, which were up 31%, while single-family starts declined by 0.4%.
• Future Trends: The permitting pace at 1.440 million units suggests potential increases in starts, particularly for multifamily homes, in the coming months. The multifamily home permit pace was 464,000 compared to 326,000 for starts, while single-family had more starts than permits.

Jonathan Smoke

Chief Economist

Jonathan Smoke leads Cox Automotive’s economic and industry insights team, which tracks key metrics and trends impacting both the wholesale and retail markets for vehicles informed by the proprietary data from the company’s businesses and platforms. For 28 years, Smoke has focused on translating data and trends into relevant actionable insights for the industries that represent the biggest purchases that consumers make in their lifetimes: real estate and automotive. Smoke joined Cox Automotive in 2017.