- March flash estimate was +1.4%
- Prior was +0.1% (revised to +0.2%)
- Ex autos +2.4% vs +2.0% expected
- Prior ex autos +2.1% (revised to +1.8%)
- April flash estimate +0.8%
- Sales higher in 10 of 11 subsectors
- Motor vehicle and parts dealers -6.4%
- New car dealers -5.9%
This is a big miss on the consensus but it appears to be all related to auto sales. The April reading is also generally healthy, though not particularly strong given the big miss on March.
New car sales were the big culprit here. Supply continues to be very difficult to find on many models so that might be some of the equation but I think that demand is a part of the equation too. The pandemic pulled forward so much demand and now it's drying up in many industries.
If demand truly moderates then I suspect incentives will come down and competition on pricing will return, that should put downward pressure on inflation over time, though given backlogs in autos and ongoing chip shortages, that won't really show up until early 2023.
