Auto and Truck Sales
Importance (A-F): This release merits a C-.
Source: Individual auto manufacturers, seasonal factors by the
Commerce Department.
Release Time: Varies by auto maker from the first business day to the
third business day of the month (data for month prior).
In Brief
Auto and Truck Sales measure the monthly sales of all domestically produced
vehicles. They are considered an important indicator of consumer demand,
accounting for roughly 25% of total retail sales. Demand for big ticket items
such as autos and trucks tends to be interest rate sensitive, making the motor
vehicle sector a leading indicator of business cycles.
Each auto maker reports sales individually. The reports are typically
released over the course of the first three business days of the month. Using
the individual reports, a total annual sales pace can be calculated after
applying Commerce Department seasonal factors. It is this annual sales pace that
the market refers to when discussing auto and truck sales for the month.
In Depth
Vehicle sales figures rarely grab the attention of the market probably for
two reasons. First, though the specifics of the data are not terribly difficult
to understand, their implications are a little hard to trace. Second, unlike
many economic releases, vehicle sales are not released all at once and at the
same time every month. This makes it difficult for the market to quickly
interpret what the numbers mean for the overall consumption picture and to react
accordingly.
This is what happens in terms of vehicle sales during the course of any given
month:
- The individual vehicle manufacturers report their sales results during the
first three or four days of the month.
- A day after the last manufacturer reports the Bureau of Economic Analysis
releases its estimate of unit auto sales.
- About a week after that the BEA releases its estimate of unit truck sales.
- The Census Bureau releases its retail sales report, including a measure of
sales at automotive dealers, usually around the 13th of the month.
- Roughly two weeks after that the BEA releases its personal income and
outlays release, including a measure of spending on motor vehicles and parts.
Each item in this list warrants a more detailed discussion.
Manufacturers
Most vehicle manufacturers usually always report sales results on the first
business day of the month; Ford does not report until the third business day. As
these individual results trickle out over the news wires throughout the day,
diligent economists and market analysts are busy calculating running totals and
applying seasonal factors to them--the BEA supplies factors for the coming six
months in advance--in order to come up with approximations for auto and truck
sales rates. These figures are some of the first hard spending data for any
given month; comparing these derived rates to those from months and years prior
is a big help when it comes to formulating a consumption forecast for the
month.
Unit Sales
Once economists and analysts have translated individual sales results into
annual rates, they turn to the BEA to provide "official" unit sales rates.
Unfortunately, though the BEA is using the same seasonal factors as the rest of
us, more often than not it produces unit rates that are modestly different than
the ones that market previously had in mind. Thankfully, however, these
differences usually pop up in the individual sales categories--domestic car
sales, import car sales, domestic truck sales, and import truck sales--but wash
out when all the vehicle types are aggregated.
Retail Sales
With unit sales rates in hand we can proceed to forecast the auto sales
contribution to the retail sales figure. And this link is important. In fact,
autos often prove to be such a significant swing factor that retail sales are
scrutinised on both a total and an excluding-autos basis. It is also worth
remembering that the auto term in the retail report is notoriously difficult to
estimate; it is not at all rare to see it decline (increase) during a month when
unit auto sales rise (fall). Still, by the time the retail sales report rolls
around, a few other preliminary spending gauges can be used in conjunction with
the unit auto data to get a pretty good read on whether retail consumption rose
or fell for the month.
Personal Consumption Expenditure
With unit sales rates and retail auto spending data in hand analysts can hone
their estimates for the auto category in the personal consumption release. Many
analysts place relatively more emphasis on the retail auto figures to sharpen
their PCE estimates, but the unit auto numbers typically have better predictive
power for that series. Besides, it is not commonly known that the BEA does not
rely at all on the the retail sales data to produce its consumption estimates.
Thus, as an important component of the monthly consumption figures that go
directly into the quarterly GDP calculation, the PCE auto data are most
important to economic forecasters.
