Two weeks ago we reported that July auto sales were a disaster: recall sales for bloated with inventory GM were down 15% YoY, Ford off 7% and Chrysler down 11% - despite record incentive spending - as overall auto sales declined and disappointed for yet another month. And yet, according to this morning's retail sales report from the Census Bureau, sales for "motor vehicle & parts stores" rose much more robustly than anyone had anticipated, rising 1.2%, the fastest pace since December.
This number was so bizarre, and so out of context with recent sales data, that SouthBay Research threw up all over it in its morning note today. Here's why:
Auto - Sales - Data - BEA - Unit
Don't believe the auto sales data. Per the BEA, unit sales were flat m/m (+90K). Meanwhile, per JD Power, July average retail prices were $950 lower than June's as auto dealers struggled to make sales and incentives averaged $3.9K, the highest on record and $100 higher than June.
Hmmm, no rise in auto sales per the real world and the BEA. Coupled with a fall in net prices. But in fantasy land, the Census Bureau announces a $1.2B m/m jump in sales and a 7%+ y/y rise.
Strength - View - Macro - Data - Favors
The Retail strength does reinforce my view that macro data favors the US in 2H and that the dollar is oversold. But the Retail...
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