In its Auto Market Weekly Summary on the U.S. auto sector, Cox Automotive said consumer spending on motor vehicles and parts declined 6.1% in May. They described this as the steepest monthly decline among major durable goods categories.
Furthermore, they said the average consumer’s ability to spend weakened during this period due to a decrease in real personal income of 0.4%. The savings rate also fell, to 4.5%, which Cox Automotive said signals potential headwinds for big-ticket purchases — like vehicles.
“Consumer spending decelerated to a decline in May,” wrote Jonathan Smoke, Chief Economist, in his report for Cox Automotive. Year-over-year measures of inflation, which the Fed follows closely, showed small gains in May,”
The report also notes that consumer plans to buy a vehicle within the next six months are stable and at the highest level since December. This, even as overall consumer confidence has declined and concerns remain over prices and interest rates.
“Consumer confidence declined in June, as did the daily index from Morning Consult through Friday. However, the monthly reading on sentiment from the University of Michigan showed an increase, with declining expectations for inflation,” wrote Smoke. The daily index of consumer sentiment from Morning Consult showed a decrease of 3.7% in June. But it was up 5.3% YoY.
