June Light Vehicle Sales

July 2, 2008 – U.S. car and light truck sales fell by 0.7M units in June to a 13.6M unit annual rate (Chart 1). That’s a negative for June’s real consumption growth.

Chart 1. U.S. light vehicle sales. Monthly and 3-month moving average. January 2000 through June 2008.

These light vehicle sales were only about flat in May, but they have been on a declining trend since the start of this year.

Light vehicle sales reached a 15-year low in June – their weakest since August 1993 (Chart 2).

Chart 2. U.S. light vehicle sales. January 1968 through June 2008.

There’s still some doubt about whether the economy actually fell into a recession this year. But, it certainly looks like a recession in the light vehicle market.

Light vehicle sales averaged 14.1M units for all of Q2 (Chart 3). That’s a decline of 1.1M units compared to Q1. In Q1, these sales fell by 0.9M units.

Chart 3. U.S. light vehicle sales. Q1 2000 through Q2 2008.

In Q1, a 13.4% annual rate of decline in consumers’ real purchases of motor vehicles & parts reduced real consumption growth by 0.6 percentage points. These data suggest a similar drag from the auto sector in Q2 consumption growth.

However, real non-auto consumer sales have been running somewhat stronger in the first two months of Q2. Thus, there’s hope for stronger real consumption growth for Q2 as a whole.

In Q1, real consumption rose at a weak 1.1% annual rate, according to the BEA’s final quarterly tally (Chart 4). The data to date would be consistent with Q2 growth of 2% to 2.5%.

Chart 4. Real consumption growth. Annualized % change. Q1 2000 through Q1 2008 and Q2 forecast.

This Q2 consumption forecast might change later this month, depending on the outcome for June non-auto retail sales.

Suzanne Rizzo