As the U.S. Dollar is the world's reserve currency, investors worldwide look to understand the dollar's intrinsic value through fundamental analysis. Consumer confidence, consumer price index, employment and jobs report, existing house sales, and other fundamental analysis elements indicate a currency's value. For the U.S. dollar, one of the fundamentals is the Automobile Sales figures. Auto sales are considered an essential indicator of U.S. economic growth. Auto sales are a crucial sign of U.S. economic contraction or expansion. Consumers' spending on automobiles may suggest their propensity to spend on other things, which investors may use to determine if an economy is expanding or contracting. For instance, an individual buying a new car could mean they bought a new house and want a new car with it. A new car can also indicate a promotion at work, which means more money. With more disposable income, people spend more, indicating an expansionary or contractionary economy.
Basic understanding of Auto Sales
Because they are used to measure consumer spending, automobile sales, also known as auto sales or car and truck sales, are a significant economic indicator in the United States. Consumer spending is significant in the world of investments since it is the money that should be followed, meaning that where consumption occurs, so does production. This is only sometimes the case, though. Auto sales, however, are a lagging economic indicator since they are based on past data monitored on a monthly and annual basis for cars and trucks. In other words, increased consumer spending on expensive things has already started when strong vehicle sales data have been published.
When Are Auto Sales Released?
Toyota Motor, General Motors, and Ford Motor are among the first to report figures on new-vehicle manufacturing and sales in the United States. During the first week of the month, automakers disclose figures over a day or two. The totals are totalled once all businesses have reported.
Auto Sales Compilation
Auto sales concentrate on passenger cars and light trucks, with a preference for new vehicles over used vehicles. Automakers disclose monthly sales statistics, which third-party parties may produce, one of which is the Wards Intelligence reports. The Federal Reserve Bank of St. Louis, which contains new car sales data dating back to 1976, is one of the more reliable sources.
Why Are Car and Truck Sales Important?
Because the automobile industry has historically employed a sizable portion of the population and investors may use it to analyse consumer spending, car and truck sales are a key indicator of the U.S. economy.
Auto Sales as an Economic Indicator
As we've demonstrated, car sales indicators are strong consumer spending and confidence in the economy's future. It can forecast a household's spending habits and identify the range of its disposable income. The number of vehicles and light trucks produced in the United States sold during the previous month is disclosed by car and light truck manufacturers for the reporting month. The Center for Automotive Research claims that the automotive sector has historically contributed between 3% and 3.5% of the nation's GDP. The monthly data determines seasonal-adjusted yearly sales rates, and market observers focus on those figures. Conversely, some economists look to vehicle sales for indicators of an economic rebound or sustained economic activity when sales decline. Rising new vehicle sales might indicate that people have more discretionary cash and are more inclined to buy other expensive products, like new homes.
Auto Sales as a Factor in Labor
Although the car industry's importance to the American economy has decreased over time, its employment is still sizable. In the United States, a sizable portion of the labour force comprises automakers, car suppliers, auto dealerships, and parts vendors on both the production and retail sides.
New Car Sales vs Used Car Sales Data
Because every new vehicle sold represents production that boosts the country's output, new car sales are a stronger indicator of the state of the American economy than used car sales. The main manufacturers provide monthly sales statistics for new automobiles and trucks. Still, due to many private sales transactions, used car sales data are more difficult to gather.
Conclusion
Auto sales in the United States are essential for understanding the American economy. While this is not a trading technique in and of itself, you may use it to help you decide where to place your money, how long to invest, and how to combine it with other indicators.