Auto Market Weekly Summary

Key Highlights

• The first estimate of third-quarter real GDP growth showed a deceleration to 2.8% from 3.0% in the second quarter.
• Personal consumption accelerated to 3.7% growth from 2.8% in the previous quarter.
• Initial October payroll estimates indicate only 12,000 jobs were created, significantly below the expected 100,000.
• October new-vehicle sales are estimated to have finished just above the Cox Automotive forecast at 1.33 million and a seasonally adjusted sales pace of 16.0 million.

Economic Insights

The first estimate of third-quarter real GDP growth showed a deceleration to 2.8% from 3.0% in the second quarter.

• Personal consumption accelerated to 3.7% growth from 2.8%.
• Spending on goods accelerated to 6.0% growth from 3.0%.
• Government spending accelerated again, contributing to the relatively strong GDP result.

Personal Income and Spending

As expected, personal income growth accelerated to 0.3% from 0.2% in August.

• Employee compensation growth was steady and strong at 0.5%.
• Government transfer payment growth accelerated to 0.4% from 0.3%.
• Spending on goods increased 0.5% following a 0.2% decline in August.

Employment

Initial October payroll estimates indicate only 12,000 jobs were created, significantly below the expected 100,000.

• Hurricane Milton negatively impacted the report.
• The private sector shed 28,000 jobs, while the government added 40,000.
• Manufacturing shed 46,000 jobs following a decline of 6,000 in September.
• Auto dealers added 3,200 jobs, which left employment at dealers down 5,300 or 0.4% below the February 2020 level.

Inflation and Spending

The Personal Consumption Expenditure Index (PCE), the key gauge of inflation that the Fed follows, increased by 0.2% in September, as expected, after rising 0.1% in August.

• According to the PCE, overall price inflation declined to 2.1% year over year, the lowest since February 2021.
• The core inflation rate was steady at 2.7% when a small decline had been expected.
• Factoring in inflation, real spending increased 0.5% in September, stronger than expected following a 0.2% gain in August.

Labor Market

The headline unemployment rate was steady at 4.1%.

• Year-over-year earnings growth increased to 4.0% from a downwardly revised 3.9% in September.
• The labor force participation rate declined to 62.6%.
• The underemployment rate was steady at 7.7%, 0.7 percentage points above February 2020.
• Monthly average hourly earnings growth accelerated to 0.4% from a downwardly revised 0.3% in September.

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.