European Car Registrations Pick Up in August

After falling for two months in a row, European car registrations sprang back strongly to gain 11.9% month-to-month in August. Still, the drops in the previous two months dominate the trend as the three-month (annualized) growth rate for car registrations is -5.4%; but the six-month (annualized) growth rate is 12.3% and change over 12 months is 7%.

Growth rates calculated from three-month averages of data show a bit more lingering weakness with growth lower in two of the last three months and lower on balance over both three-month and six-month and higher year-over-year by 4.8%. The long-term smoothed average that calculates the 12-month average gain relative to the 12-month average of 12-months ago finds a similar rise of 4.8%. Euro area sales momentum of about 5% seems well entrenched by those two longer term gauges.

Viewed by countries, sales were higher in all five markets in August with France the weakest logging a rise in registrations of just 2.3%. Italy and Spain are the strongest by far, with gains of 22.4% and 17.5%, respectively. In both cases, those two countries were coming off substantial monthly drops in registrations in July.

Over three months, annualized growth rates are lower on balance in Germany and France where each country logs a double-digit drop. These results contrast with double-digit gains in Italy and the U.K. as well as a solid gain in Spain.

Over six months, only U.K. registrations drop and the annualized growth rate drop is in double digits. Spain logs a ridiculous growth rate of 40.1% over six months as Italy and France show double-digit gains and German registrations rise at a 6.8% pace.

Over 12 months, France, Italy and Spain have double-digit gains with German registrations at a weaker 3.5% pace. The U.K., however, logs a year-on-year decline to go with its six-month drop. Recent U.K. monthly sales have been bouncing up and down. The U.K. market is looking more like it is struggling.

The European Central Bank is vetting all the economic statistics more closely to get a sense of economic strength. Today's data seem pass the test of strength as the weakest sales are in the U.K. outside the domain of the ECB. EMU-area countries' registrations remain solid or even solid-to-strong. Inflation has shown some firmness in the euro area over the last four months as well. Economic data continue to give the ECB the basis it will need to begin its policy shift to less accommodation.