by Mish

Apparently, economists did not see the restocking needed for many hundreds of thousands of autos ruined by hurricanes Harvey and Irma.

Highlights
With about 2/3 of September’s data in, unit vehicle sales are running substantially above August in what is a significant early indication of strength for the September retail sales report. August was an unusually weak month for auto sales and was held down in part by Hurricane Harvey’s late month landfall in Texas. The early results today point to a rebound in Houston area sales, specifically perhaps replacement sales for damaged vehicles, and they also point at limited effect from Hurricane Irma’s September landfall in Florida. Final totals for September unit sales will be posted at day’s end.
Recent History
Motor vehicle sales are coming off their worst showing in 3-1/2 years due to initial disruptions from Hurricane Harvey. The weakness in unit sales translated into weakness for dollar sales as tracked in the retail sales report where the vehicle component dropped sharply during August. Though Hurricane Irma’s Florida hit is in play for September’s numbers, forecasters see much better strength with the consensus for total unit vehicle sales at a 16.7 million annualized rate vs August’s 16.1 million. Yet the low call for this reading, at 15.0 million, does reflect expectations for a major hurricane hit. Sales of domestic-made models are expected to come in at 12.6 million vs the prior month’s 12.7 million.

Some Numbers

Business Insider reports Big 3 Carmakers Crush Sales Expectations.

RECOMMENDED ARTICLES

  • Ford: 8.9% (2.3% expected)
  • Fiat Chrysler: -9.7% (-13% expected)
  • GM: 11.9% (7.9% expected)
  • Toyota: 14.9%
  • Nissan: 9.5% (-8.7% expected)
  • Honda: 6.8% (1.5% expected)

The only reason sales crushed estimates is economists cannot think.

Let’s not blame all of August’s weakness on hurricanes. And let’s not confuse replacement of storm-damaged autos with renewed strength.

Finally, and as I have commented before, the net impact of hurricanes is not good for the economy, even if it helps a couple of areas in isolation.

Mike “Mish” Shedlock

Auto Sales Jump as Hurricane Replacement Continues: Ford Sees "Plateau"

Ford, Toyota, Honda, and Nissan reported monthly gains in the U.S., setting the stage for a strong industry finish in 2017. Economists misinterpret this hurricane-related impact with actual, ongoing strength.

Durable Goods Order Jump Led By Autos: Positive Hurricane Impact?

The Census Bureau reports “New orders for manufactured durable goods in August increased $3.9 billion or 1.7 percent to $232.8 billion, the U.S. Census Bureau announced today.

Auto Sales Weak Again, Average Loan Hits Record 5.75 Years: Don’t Worry “Plateau Expected”

With about 3/4 of the totals in, vehicle sales in June are running no better than even compared to May’s 16.7 million annualized rate according to Econoday.

J.D Power and LMC Estimate July Auto Sales Down Five Percent, Time in Inventory Highest Since 2009

July auto sales based on mid-month totals look grim despite record incentives. Industry analysts J.D Power and LMC estimate U.S. July auto sales down 5 percent.

Three Big Red Flags for Auto Sales

In March, auto sales unexpectedly declined 5.7%. Forecasts now suggest April will mark the fourth straight monthly decline in U.S. vehicle sales.

Industrial Production Jumps: Another Hurricane Effect?

Industrial production rose 0.9% in October after a revised 0.4% in September. In reference to the discrepancy between industrial production and the regional Fed manufacturing reports, Econoday says "The last piece has fallen into place." What's the real story?

Retail Sales Moderate, Still Show Huge Hurricane Impacts, Especially Autos

October retail sales rose 0.2% following a revised 1.9% gain in September, up from 1.6%. Autos continued to surge up 0.7% from September's 4.6% rise. Excluding autos, sales rose only 0.1%

Existing Home Sales Rise First Time Since May: Hurricane Impacts Abate, NAR Begs for Subsidies

Existing home sales rose 0.7 percent, the first increase since May. The NAR reported 5.39 million sales at a seasonally adjusted annualized rate (SAAR) topping the Econoday consensus estimate of 5.30 million sales.

Retail Sales Jump Due to Hurricane Impact: GDP Impact?

Retail sales in September increased 1.6 percent from August. Hurricane impacts are clearly in play.