US light vehicle sales increased in May

Domestic light vehicle sales rose to a seasonally adjusted rate of 15.9mn in May, a third straight month of annual increases.

Sales of light vehicles — trucks and cars — increased from a seasonally adjusted annual rate of 15.8mn in April, the Bureau of Economic Analysis reported today. May's rate, the highest of 2024 so far, rose from a rate of 15.5mn units in May last year.

Inflationary pressures that have kept borrowing costs elevated have failed to deter American consumers from spending. The US Federal Reserve has signaled it will not lower its target lending rate from a 23-year high until policymakers are more confident that inflation is slowing at a sustainable pace. Still, a contraction in manufacturing activity in May, the 18th month of contraction in 19 months, and indications of weaker hiring growth has boosted odds the Fed will begin cutting its target rate later in 2024, which would spur car sales.

Sales of light trucks rose to a 12.8mn unit rate in May from a 12.74mn rate in April, while car sales were little changed at a 3mn unit rate sequentially.

Domestic auto production dropped to a seasonally adjusted rate of 122,600 in April — the lowest level since September 2021 — from 150,600 in March. Auto assemblies are reported with a one-month lag to sales.

By Alex Nicoll