Smoke on Cars
Auto Market Weekly Summary
Monday July 22, 2024
Article Highlights
- Retail sales for June saw no growth in consumer spending, which was considered favorable compared to the anticipated decline.
- Residential construction trends took a positive turn in June, with permits and starts surpassing expectations.
- Weekly jobless claims data indicates a projected weakness in the labor market, as initial jobless claims increased and the duration of claims seems to be extending.
Highlights
- Retail sales for June saw no growth in consumer spending, which was considered favorable compared to the anticipated decline. The auto sector underperformed the rest of the retail market as sales excluding motor vehicles and parts increased 0.4% while sales of motor vehicles and parts declined 2.0%.
- Residential construction trends took a positive turn in June, with permits and starts surpassing expectations. The annualized rate of starts increased by 3.0%, and permits rose by 3.4%. These were mainly driven by multifamily activity.
- Weekly jobless claims data indicates a projected weakness in the labor market, as initial jobless claims increased and the duration of claims seems to be extending.
Retail Sales Performance: Mixed Results
June’s retail sales report revealed no growth, which was better than the expected decline. While the auto sector experienced a downturn due to software issues, there were notable gains in e-commerce and building supplies, leading to a slight overall increase compared to the previous year.
- June’s report on retail sales revealed zero growth, which, although stagnant, was still better than the expected 0.3% decline.
- The auto sector experienced a downturn, with sales of motor vehicles and parts dropping 2.0%. This decline was influenced by software disruptions that impacted most franchise dealers.
- However, sales increased in nine out of twelve major categories, with nonstore (e-commerce) retailers and building material and garden equipment and supplies dealers making the most significant gains.
- Overall, retail sales saw a marginal increase of 2.3% year over year.
Residential Construction Trends: A Positive Shift
In June, the residential construction sector showed stronger-than-expected growth in permits and starts, driven by a significant boost in the multifamily sector, while single-family starts increased despite a year-over-year decline in total starts.
- In June, both permits and starts exceeded expectations in the residential construction sector, with increases of 3.0% and 3.4%, respectively.
- This positive trend was attributed mainly to the multifamily sector which saw an increase of 19.6% in starts.
- Total starts in June were down 4.4% year over year, with single-family starts up 5.4% year over year and multifamily starts were down 23%.
Jobless Claims Data: A Weakening Labor Market
Data indicate a rise in initial jobless claims and continuing claims, pointing to a softening labor market with new claims exceeding pre-pandemic levels and reaching their highest level since December 2021.
- Data shows an upturn in initial jobless claims by 20,000 to 243,000 for the week ending July 13, suggesting a softening labor market.
- There were 32,100 more jobless claims than we saw in 2020 before the pandemic began.
- The broadest measure of continuing claims declined by 27,000 to 1.82 million in the latest data, which lags the traditional number and is not seasonally adjusted. That total measure is up 87,200 over the last four weeks but is 285,000 lower than the pre-pandemic level.
- The labor market appears to be deteriorating, as the trend in new claims is increasing while claims are lasting longer.
Jonathan Smoke
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.