Cox Auto’s Weekly Market Update shows unemployment lower, SAAR drops

Cox Automotive released its auto market weekly summary on March 7, which detailed updates on job growth, February new vehicle sales numbers, and a slow start to the tax season. The report indicates that while concerns over COVID-19 have dissipated in large part and the workforce has resumed to near pre-pandemic levels, hurdles still exist that affect the sales market for the automotive retail sector.

Job Creation Spikes, Unemployment Drops

According to Cox Auto’s update, job growth increased to 678,000 in February, which is a much stronger number than the initially estimated 423,000. While the hospitality industry added the most jobs (179,000), auto dealers reportedly added 800 jobs. The coronavirus pandemic still continued to impact workers, as 4.2 million people reported they are unemployed due to their business closing or losing business as a result of it. While that number is still high, it is 30% lower than January’s number.

Payrolls are reportedly still down over 2 million compared to February 2020.

Headline unemployment dropped to 3.8% for the month of February, which is the lowest it has been since the start of the pandemic. The February report from the Bureau of Labor Statistics indicated the total number of unemployed individuals was 6.3 million, almost 4% lower than January’s number. Underemployment slightly increased in February, as did the number of people who have temporarily been laid off from their jobs. There was no change in average hourly earnings for the month.

The number of people utilizing traditional unemployment benefits dropped to 1.48 million, which is less than it was pre-pandemic, and new claims also dropped to 215,000.

New Car Sales Fall, Incentives Low

Cox Auto’s weekly report noted that new light-vehicle sales increased 6% compared to January but dropped 12% compared to February of 2021. The seasonally adjusted annual rate (SAAR) for light vehicles also fell, ending up at 14.1 million, which was down 6% month-over-month and 11% year-over-year.

Overall, government, commercial, and rental purchases dropped 30% compared to last February. While government and commercial fleets had slight gains, the sharp drop collectively was due to a 52% drop in rental sales year-over-year. The estimated SAAR for fleets dropped to 12.2 million, and Cox Auto’s weekly report added that “tight supply and limited improvement in production” is impacting the pace of new vehicle sales.

Consumers are still seeing a widespread shortage of incentives, as average incentive spending reportedly dropped to $1,654 per vehicle, which is less than 50% from what it was in February 2021.

Tax Refund Update

Lastly, Cox Auto’s report noted that the pace in which tax refunds have been distributed has been much slower this year, with only an estimated 26% of total refunds being issued to date. The average refund amount, however, has increased 15% from February of 2021, meaning consumers will get more money back to utilize towards purchases. The slow start to the tax season along with higher returns may lead to a delayed start of the strong used-vehicle market we normally see in the Spring.

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