Auto sales were so strong in May it moved the needle on GDP
May auto sales crushed expectations.
In May, the pace of auto sales in the US rose to a seasonally adjusted annualized rate of 17.79 million vehicles according to Autodata, a new post-recession high and the fastest pace in almost 10 years.
Economists had expected sales to come in at a pace of 17.3 million. In May, all of the major carmakers reported better-than-expected sales increases or smaller-than-expected declines.
In a note to clients following the report, Jesse Hurwitz, an economist at Barclays, said, "We have been looking for a bounce back in consumption growth following the puzzlingly weak April data and today's sales reports from auto manufacturers suggest these gains are starting to materialize."
The increase was so substantial, in fact, it moved the needle on Barclays' GDP tracking estimate.
On Tuesday, Barclays increased its estimate for second quarter GDP to 2.6% from an earlier estimate of as low as 2.3% after Monday's personal income and spending report.
This week is chock full of economic data, including the all-important May jobs report on Friday, and so these estimates are likely to change.
But on Tuesday, the auto industry is sending a seriously strong signal about the US economy.
