Auto sales experienced a significant uptick in November, setting the stage for a robust annualized growth rate of at least 19.1% in the fourth quarter. This expansion in auto sales is poised to make a substantial contribution to the fourth-quarter GDP growth from goods consumption. Meanwhile, the 10-year US Treasury bond yield remained above 4.6% following recent US data, while weak Jobless Claims figures contributed to diminished demand for the US Dollar.
Several subsidy programs for electric or hybrid vehicle purchases expired in January, potentially motivating buyers to make their purchases before the end of last year. November's retail sales report fell short of expectations, but despite this, retail sales volumes still managed to rise by 4.9% annualized in the fourth quarter, marking the best performance in a year.
"Remember that several subsidy programs for the purchase of electric or hybrid vehicles expired in January, which probably encouraged many car buyers to pull the trigger at the end of last year."
Excluding automotive sales, however, retail volumes may have contracted during the quarter. This underscores the critical role that auto sales played in driving overall consumption growth.
"Including the December advance reading, we indeed estimate that retail sales volumes rose by no less than 4.9% annualized in Q4, the best performance in a year. Excluding cars, however, sales volumes may have contracted during the quarter, highlighting the extent to which sales were driven by a single category in the final quarter of last year."
The GBP/USD currency pair fluctuated above 1.2300 in the latter half of Thursday, reflecting mixed signals in currency markets. Similarly, the EUR/USD pair extended its sideways movement around 1.0400 during the American session on Thursday.
In commodity markets, gold prices experienced a correction from their multi-month high set above $2,760 on Wednesday. The XAU/USD pair traded below $2,740 on Thursday, indicating a shift from its earlier peak.
The expiration of vehicle subsidy programs appears to have been a key driver behind the surge in auto sales toward the end of last year. This increase in dealership spending is projected to significantly bolster fourth-quarter GDP growth through goods consumption.
"Outlays of items correlated with the housing market continued to fall, as did spending on food. On a more positive note, auto sales saw another solid expansion in November and were on track to grow by no less than 19.1% in annualized terms in the fourth quarter (18.2% in real terms). These good times may not last, however."
Despite these positive indicators, other sectors showed signs of contraction. The weekly Initial Jobless Claims rose to 223,000 from 217,000 in the previous week, suggesting some underlying weaknesses in employment figures.