Smoke on Cars
Auto Market Weekly Summary
Monday October 21, 2024
Key Highlights
- Retail Sales Performance: September saw a stronger-than-expected 0.4% monthly gain in consumer spending, with the auto sector underperforming the rest of the retail market.
- Residential Construction Trends: Both permits and starts declined in September, with the multifamily sector showing the most significant drops.
- Labor Market and Consumer Sentiment: Initial jobless claims declined, but continuing claims increased, indicating a deteriorating labor market. Consumer sentiment also declined unexpectedly.
Retail Sales
The initial retail sales report for September showed a stronger-than-expected and accelerating 0.4% monthly gain in consumer spending.
- The auto sector underperformed the rest of the retail market as sales excluding motor vehicles and parts increased by 0.5%. In comparison, sales of motor vehicles and parts were unchanged following a downwardly revised decline of 0.4% in August.
- Category-level performance was mostly positive, as nine of the 12 major categories saw sales increases for the month.
- Miscellaneous store retailers (+4.0%) and clothing and accessories stores (+1.5%) had the largest gains.
- Furniture, home furnishing, electronics, and appliance stores (-2.2%) and gas stations (-1.1%) had the largest monthly declines.
- Retail sales were up 1.7% year over year on a nominal basis, which was down from an upwardly revised 2.2% year-over-year increase in August.
- Adjusted for inflation using the CPI, retail sales were up 0.2% for the month but down 0.7% year over year.
Residential Construction Trends
Residential construction trends were weakly negative in September as both permits and starts declined, but both were expected to see small declines.
- The seasonally adjusted annualized rate of starts declined 0.5% when a 0.4% decline was expected, but August was revised slightly higher.
- Permits declined 2.9% when a 0.7% decline was expected, and August was revised slightly lower.
- The declines in permits and starts were in the more volatile multifamily sector.
- Starts increased 2.7% in single-family but declined 9.4% in multifamily.
- After the September decline, total starts were down 0.7% year over year, while single-family starts were up 5.5% year over year, and multifamily starts were down 16.2%.
- Permits were down 1.2% year over year in the single-family, while multifamily permits were down 14.1%.
Labor Market
Seasonally adjusted initial jobless claims declined by 19,000 to 241,000 for the week ending Oct. 12.
- Nonseasonally adjusted initial claims declined by 11,400 but were 20,400 lower than they were before the pandemic.
- Continuing claims, which represent people who previously filed and remain on traditional unemployment compensation, increased by 9,000 to 1.87 million as of Oct. 5.
- The broadest measure of continuing claims increased by 500 to 1.64 million in the latest data, which lags the traditional number and is not seasonally adjusted.
Consumer Sentiment
Consumer sentiment measures are showing mixed trends in October.
- The initial October reading on Consumer Sentiment from the University of Michigan declined 1.7% to 68.9, which was a negative surprise as improvement was expected. Even with that decline, the index is up 8% year over year.
- Consumers’ views of buying conditions for vehicles improved to the best level since April as views of interest rates improved.
- The daily index of consumer sentiment from Morning Consult reflects more positive recent trends, with the index increasing 1.4% in September and extending a four-month upward trend.
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.