11.3 Pct Hike In Auto Sales Drives Durable Goods Growth In July

Americans made virtual trips to car showrooms in July as new orders for manufactured durable goods, products lasting three years or more, increased by 11.2 percent, or $23.2 billion, to $230.7 billion, according to a report from the U.S. Census Bureau.

Last month’s numbers follow a 7.7 percent hike in June. The two month’s worth of gains helped to offset big declines in April and May as much of the nation was shuttered to protect from the pandemic.

The boost was, in part, the result of U.S. vehicle sales that rose by 11.3 percent to 14.5 million in July compared to June, TD Economics reported. That’s the third consecutive monthly rise in auto sales. The results were better than the estimate of 14.1 million.

“U.S. vehicle sales continue to rebound from their April lows, having now recorded sizable gains in each of the last three months,” said Thomas Feltmate, a senior economist at TD Bank Group, in a note. “However, sales remained over 13 percent below their pre-virus (February) levels.”

Durable goods shipments increased to $16.6 billion, or 7.3 percent, to $244 billion. This followed a 15.2 percent June increase.

Transportation equipment, also up three consecutive months, led the increase by 35.6 percent to $74.7 billion.

In June, a consumer spending report by Opportunity Insights, a Harvard research enterprise, found that high-income households reduced their spending by 17 percent, and low-income households reduced their spending by 4 percent through mid-June. Two-thirds of the total reduction in credit card spending since January had come from that cohort.

In contrast, households in the bottom 25 percent of income, kept spending at the same levels as had been seen before the pandemic.

“The pattern of spending reductions during this recession differs sharply from that of prior recessions, during which spending on services remained essentially unchanged while spending on durable goods (e.g., new appliances or cars) fell sharply,” the report stated.