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December Consumer Sentiments Could Be Negative for Autos

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Positive trend in consumer sentiments

In November 2017, the US Consumer Sentiment Index was at 98.5—higher compared to 93.8 a year ago. Clearly, the data reflected a significant improvement in US consumer sentiments in the past year.

The US Consumer Sentiment Index’s figures are collected by Thomson Reuters and the University of Michigan. The figures are released every month. To come to a conclusion, the Survey Research Center conducts at least 500 telephone interviews with a variety of US consumers.

Note that investors should pay attention to recent trends in consumer sentiment because it shows consumers’ views towards the country’s economic prospects.

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December preliminary data and auto sales

The US Consumer Sentiment Index is shown in the above chart. The index reflects a strongly positive trend. It’s near the highest level since January 2004. Notably, the index fell to 93.4 in July 2017 and recovered to 100.7—so far, the highest level this year.

The December 2017 preliminary consumer sentiment data stood at 96.8—compared to 98.2 in December 2016. The preliminary data also reflected a 1.7% fall from the consumer sentiment data in November.

A lower US Consumer Sentiment Index is considered negative for the future of auto sales. It could increase auto investors’ concerns about the future of US auto sales.

In 2016, US auto sales were at the highest level due to higher demand for trucks and utility vehicles. Key automakers (IYK) like General Motors (GM), Toyota (TM), Ford (F), and Fiat Chrysler (FCAU) benefited from the positive trend in US auto sales last year.

In the next part, we’ll take a look at recently released non-farm payroll data for November 2017. We’ll see what the data could mean for auto demand.

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