In the Cox Auto Market Report* published this morning, Chief Economist Jonathan Smoke noted that first half of August saw massive volatility in the stock market, but halfway through the month there is strength in the retail sale vehicle market.”
“Keep your seatbelts buckled as the election, geopolitics and the Fed are all likely to create more volatility over the next several weeks,” Smoke cautioned.
Smokes’s Insights courtesy of Cox Automotive.*
- Headline inflation and core CPI increased by 0.2% in July. This reflects controlled price pressures and is the lowest year-over-year CPI since March 2021.
- Consumer spending rose significantly, with retail sales up 1% month over month. The motor vehicle sector played a major role in this recovery, highlighting consumer demand’s resilience.
- July saw declines in both permits and starts in residential construction. However, a strong permitting rate suggests potential future growth, yet challenges remain in the housing market.
Inflation and Core CPI
The July CPI report affirmed continued declines in year-over-year inflation to the lowest level since March 2021. Shelter drove 90% of the July monthly increase, and without shelter, inflation is under the Fed’s target. Furthermore, shelter is not going to improve with rates in restrictive territory as new construction has fallen in response to the high rates, yet we have a persistent lack of supply that needs years of higher production.
- July saw a 0.2% increase in both headline inflation and the core consumer price index (CPI), as anticipated.
- A significant monthly gain was driven by housing, seeing a rise to 0.4%, a jump from the previous 0.1%.
- Transportation was again disinflationary at -1.3%, despite a slight increase in motor fuel, as new and used vehicle prices and airline fares continued declining.
- New vehicles recorded a 0.2% decline in prices, while used cars saw a whopping 2.5% decline. We observed new vehicle prices not changing in July, but incentives increased. We saw divergent trends in used car prices in July as wholesale prices increased but retail prices fell.
- The overall year-over-year CPI declined to 2.9%, marking its lowest point since March 2021.
Positive Retail Sales Report
Retail sales saw a strong 1% monthly gain in July, driven by a recovery in auto sales and service that was artificially restricted by software outages in June. Ignoring auto sales, retail sales were up 0.4%. Adjusted for inflation, retail sales, including auto sales, were down 0.1% year over year.
- July’s initial retail sales displayed a robust 1% monthly gain in consumer spending, following abnormal conditions in June that caused a decline in sales driven by the auto market.
- The auto sector outperformed the rest of the retail market as sales excluding motor vehicles and parts increased 0.4% while sales of motor vehicles and parts jumped 3.6%, following a decline of 3.4% in June.
- Category-level performance was mostly positive, as nine of the twelve major categories saw sales increases for the month. The auto market and furniture, home furnishing, electronics, and appliance stores (+1.0%) had the largest gains.
- Retail sales increased 2.7% year over year, a rise from June’s 2.0% year-over-year increase.
*Cox Automotive
Cox Automotive says it is the world’s largest automotive services and technology provider. Fueled by the largest breadth of first-party data fed by 2.3 billion online interactions a year, Cox Automotive tailors leading solutions for car shoppers, automakers, dealers, retailers, lenders, and fleet owners. The company has 25,000-plus employees on five continents and a family of trusted brands that includes Autotrader®, Dealertrack®, Kelley Blue Book®, Manheim®, NextGear Capital™, and vAuto®. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately owned, Atlanta-based company with $22 billion in annual revenue. Visit coxautoinc.com or connect via @CoxAutomotive on X, CoxAutoInc on Facebook, or Cox-Automotive-Inc on LinkedIn.
Strength in August Auto Retail Market but…
In the Cox Auto Market Report* published this morning, Chief Economist Jonathan Smoke noted that first half of August saw massive volatility in the stock market, but halfway through the month there is strength in the retail sale vehicle market.”
“Keep your seatbelts buckled as the election, geopolitics and the Fed are all likely to create more volatility over the next several weeks,” Smoke cautioned.
Smokes’s Insights courtesy of Cox Automotive.*
Inflation and Core CPI
The July CPI report affirmed continued declines in year-over-year inflation to the lowest level since March 2021. Shelter drove 90% of the July monthly increase, and without shelter, inflation is under the Fed’s target. Furthermore, shelter is not going to improve with rates in restrictive territory as new construction has fallen in response to the high rates, yet we have a persistent lack of supply that needs years of higher production.
Positive Retail Sales Report
Retail sales saw a strong 1% monthly gain in July, driven by a recovery in auto sales and service that was artificially restricted by software outages in June. Ignoring auto sales, retail sales were up 0.4%. Adjusted for inflation, retail sales, including auto sales, were down 0.1% year over year.
*Cox Automotive
Cox Automotive says it is the world’s largest automotive services and technology provider. Fueled by the largest breadth of first-party data fed by 2.3 billion online interactions a year, Cox Automotive tailors leading solutions for car shoppers, automakers, dealers, retailers, lenders, and fleet owners. The company has 25,000-plus employees on five continents and a family of trusted brands that includes Autotrader®, Dealertrack®, Kelley Blue Book®, Manheim®, NextGear Capital™, and vAuto®. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately owned, Atlanta-based company with $22 billion in annual revenue. Visit coxautoinc.com or connect via @CoxAutomotive on X, CoxAutoInc on Facebook, or Cox-Automotive-Inc on LinkedIn.