Strong US vehicle sales indicate durable goods consumption likely recovered in April

The data from BEA seasonal adjustment factors and WardsAuto shows that in April, lightweight vehicles’ sales in the US reached 17.32 million units saar. This is on par with consensus projections of 17.4 million and slightly below Barclays expectations of 17.5 million. Auto sales in the US grew 1.9% m/m in April to 6.8 million units, while sales of light truck rose 7.5% to 10.5 million units saar.

Seasonally adjusted auto sales in April grew 5.2% m/m, reversing most of the decline that weakened Q1 real consumption growth to a moderate 1.9%. The 17.3 million motor vehicle sales seem to be a more sustainable level as compared with 2015’s high of 18.1 million, according to Barclays. Furthermore, the rebound in sales in expected to suppress worries that the US consumer is rolling over, noted Barclays.

Given the strong labor market readings, household income gains are expected to be strong and hence consumption growth is likely to remain stable at 2.5%, added Barclays. The strong vehicle sales data in April show that consumption of durable goods possibly recovered in April from the slowdown seen in March.

“Better household consumption of durables at the beginning of the quarter sets up Q2 data to meet our expectation of 2.5% real consumer spending growth and 2.0% overall GDP growth”, said Barclays.