Skip to main content

Retail sales report may hold important clues to growth

Autodata said last week that auto sales rose to a seasonally adjusted annual rate of 17.8 million units in May, beating economists’ expectations.

The robust jobs report for May was last week’s biggest business news, but boatbuilders and other makers of big-ticket items would be wise to take note of a jump in U.S. auto sales for the month and watch for signs of corresponding growth at other stores in the May retail sales report the government will issue on Thursday.

Autodata said last week that auto sales rose to a seasonally adjusted annual rate of 17.8 million units in May, beating economists’ expectations. GM, Fiat Chrysler, Volkswagen of America, Audi, BMW and Mercedes-Benz were among the automakers that reported sales increases for the month. The gain was the strongest since July of 2005.

The Detroit News reported that easy credit, longer loans and Memorial Day weekend promotions lured buyers into showrooms.

“With the national average price of gasoline down nearly a dollar per gallon, on average, from one year ago, truck and SUV demand remains strong, elevating average transaction prices, especially for domestic automakers, in May,” Kelley Blue Book senior analyst Karl Brauer told Automotive News. “We also saw incentives spending remain nearly flat in May, which shows the strength of the overall new-car market.”

As the Federal Reserve decides whether to raise interest rates later this year, it will look beyond the growth reflected by the 280,000 new jobs the economy added in May and an 8-cent increase in average hourly earnings to gauges such as auto sales and broad retail sales results.

Retail sales were flat in April, but MarketWatch is reporting that better weather and May’s strength in vehicle sales probably portend higher spending at a range of stores.

“We are expecting there to be improvement across the board,” Sam Bullard, senior economist at Wells Fargo Securities, told MarketWatch.

MarketWatch said healthy jobs and spending data will likely support the Fed’s plan to raise rates this year, a step officials want to take to avoid an “overheating” economy, as Federal Reserve chairwoman Janet Yellen warned in a speech.

“Retail sales numbers should look really good, and it they come after a strong employment report, those may be the two most important variables that will give the [Fed] more comfort,” said Joseph LaVorgna, chief U.S. economist with Deutsche Bank.

The Fed’s rate-setting Open Market Committee will meet June 16-17, but economists don’t expect the Fed to raise rates at that time.

The Commerce Department reported May 29 that the nation’s gross domestic product fell by a seasonally adjusted annual rate of 0.7 percent in the first quarter, and the Fed is likely to wait for more statistical confirmation that the economy is growing sufficiently for inflation to pose a threat.

Related

AMI-PRE-CONFERENCE

AMI Hosts Pre-Conference Sessions

The sessions on leadership and marina management, and a tour of a nearby marina and boatyard operation, precede today’s official kickoff of the group’s annual conference.

1_DEALER.OUTLOOK

Boating’s Greatest Thingamabob

The Seattle Boat Show kicks off next week with nearly 300 exhibitors, 800 new boats and the construction of a 100-foot Rube Goldberg boat machine.

1_YEARGIN copy

Business for Good

Companies have a unique platform to make people’s lives better through products and services, how we treat employees and the kind of advocate we are for our industry.

1_PULSE.PING.2

Are You Improving the Service Experience?

This month’s Pulse Report survey asks dealers about tactics being employed to improve the service department, along with other questions about retail conditions. Take the survey here.

1_OFF.THE.HOOK.JPG

Off the Hook Yacht Sales Acquires Two Marinas

The company announced that it purchased facilities in Hampstead, N.C., and Georgetown, Md.

1_GILLEN.YS

Gillen Announces Expansion, New Hire

The yacht services company will move into a new, 15,000-square-foot location in West Palm Beach Fla., run by operations manager Tony Matherly.

1_YEARGIN

Business for Good

Companies have a unique platform to make people’s lives better through products and services, how we treat employees and the kind of advocate we are for our industry.

DOMETIC-EARNINGS

Dometic Posts Sales Increase for Q4

Net sales of $596 million were up 11% compared with the previous-year quarter, and profit was reported at $2.6 million.