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