Blog 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.