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February 1, 2006 – Based on reports from the automakers, U.S. car and light truck sales rose by about 0.4M units to an estimated 17.6M unit annual rate in January, continuing the rebound that began in November (Chart 1).
By historical standards, these are strong light vehicle sales (Chart 2).
January light vehicle sales exceeded their Q4 average by about 1.7M units. This compares to a 2.1M unit decline for all of Q4 (Chart 3).
As a result of that Q4 decline in light vehicle sales, real consumer spending growth slowed to a mere 1.1% annual rate in Q4 from 4.1% in Q3.
As widely reported, automakers said that January light vehicle sales were boosted by two temporary special factors: unusually strong fleet sales (high-volume sales to businesses or government) and unusually warm weather. Thus, in January, consumers accounted for a smaller share of light vehicle sales than they typically do. And, light vehicle sales may be hard pressed to match their January level for the balance of Q1.
Nevertheless, compared to Q4, January light vehicle sales should be strong enough to establish a good head start for Q1 consumption growth.
Suzanne Rizzo