US: strong automotive sector buoys entire economy image

As almost all automakers selling cars in the US reported better than expected sales, the promising outlook seems to cast a positive light on the outlook for the wide-economy, which is slated now to grow in the second-quarter.

The better than predicted automotive sales add up to the rising order for all US factory made products, better employment and other positive manufacturing data, all showing the promise of an economic rebound from the slump in the first quarter – mainly induced by the very harsh winter.

“This is consistent with other data showing growth bouncing back in the second quarter. Everything looks set for solid growth in the second half of this year,” said Gus Faucher, senior economist at PNC Financial Services Group.

The automakers reported a total of 1.61 million vehicles sold in May, an increase of 11.4% over the same month last year, which led to a seasonally adjusted annual rate of almost 16.8 million units, according to researcher Autodata.

“These are stunning numbers, especially since the industry is in the midst of some massive, highly publicized recalls,” said Anthony Karydakis, chief economic strategist at Miller Tabak in New York. “We would view this as a strong sign of a consumer sector emerging more confident with pivotal positive implications for spending and growth later in the year.”

For good measurement, while all big seven automakers in the US reported positive data, GM and Chrysler said this was their best May month in seven years, Nissan announced last month to be its best May ever and Hyundai said it’s the best month the company had in the US.

Via Reuters