US auto sales growth declines for 5th successive month

US autos May13.pngBlog readers read it here first. Last month the blog did some simple sums to show that US auto sales were unlikely to continue to grow at the 8.6% reported rate of Q1. The reason was that sales had been increased by the need to replace the 250k autos destroyed during Hurricane Sandy in November.

As the chart shows, April’s figures confirm the blog’s analysis:

• 2012 sales (red square) failed to maintain Q1’s momentum
• The seasonally adjusted annual sales rate fell below 15m for the first time since October
• As analysts Ward’s note, “April’s 4.1% rise in daily sales was the smallest year-over-year gain since August 2011“, and they add
• “It marked the fifth consecutive month that year-over-year sales growth has declined

Equally, as the Wall Street Journal notes, “nearly four years since the recession ended, the pace of expansion remains grindingly slow“. And whilst last week’s US jobs report was viewed as positive by financial markets, it was of course taken before the impact of the sequester began.

The blog thinks it unlikely that the $1.2tn sequester-based cuts now underway in Federal spending will support increased consumer spending over the rest of the year. It is far more likely that households will spend less, and save more, in case their own jobs become threatened.

Q1 auto sales growth, assisted by the after-effect of Sandy, may well therefore turn out to have been the strongest of the year.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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