U.S. Light Vehicle Sales Surged

Light vehicle sales rose more than expected in August to a 19.0M unit annual rate. The 9.6% gain versus July contrasted with Consensus expectations for a m/m decline to 17.0M.

Sales of light trucks were the standout last month rising 12.8% m/m to a near-record selling rate of 10.75M units.

Car sales rose as well, up 5.7% for the third consecutive respectable monthly gain.

Sales of domestic light vehicles jumped 10.3% to a 15.5M unit selling rate on the strength of a 14.0% rise in light truck sales.

Imported vehicle sales rose a lesser 6.3% and captured 18.4% of the US market.

Nonfarm labor productivity growth last quarter was revised up to 6.8% from an already strong 5.7% reported last month. Consensus expectations had been for an upward revision to 6.2% growth.

The upward revision led to a revision of the initially reported 2.1% decline in unit labor costs to a 2.8% decline. It was the sixth decline in unit labor costs over the last eight quarters. During that period unit labor costs are down 3.5%. Compensation growth was revised up slightly for 2Q to a 3.8% rate.

The upward revision to productivity stemmed from an upward revision to output growth, now pegged at 4.4% (versus a preliminary 3.4%). That was accompanied by a 2.3% decline (about unrevised) in hours of all persons (employment times hours). Since peaking in three years ago, hours worked have fallen 5.5%.

Productivity in the nonfinancial corporate sector, a figure derived from the income side of the National Income & Product Accounts, surged at an 8.1% annual rate (4.8% y/y). That was the fastest rate of growth since 4Q 2001 and the second fastest growth rate since 1975. It drove down unit labor costs at a 3.8% rate (-1.1% y/y).

Manufacturing sector productivity growth in 2Q was revised down slightly to 3.7% (3.5% y/y). Unit labor costs rose 1.5% (0.8% y/y), revised up slightly.

Initial claims for jobless insurance rose to 413,000 last week and the prior week's level was revised up slightly to 398,000. Consensus expectations had been for claims of 390,000.

The four-week moving average of initial claims rose to 401,500 (+0.9% y/y), the first time above the 400,000 threshold since late July.

Continuing claims for unemployment insurance rose by 24,000 for the third consecutive weekly gain but the prior week's gain was revised down to only 9,000.

The insured rate of unemployment held steady at 2.9% where it's been for six weeks.

Factory orders jumped another 1.6% in July following a 1.9% pop in June. Strong orders for nondurable goods, up 2.4%, drove the gain. The rise reflected higher orders for petroleum products but also sharp gains in orders for chemicals & plastics. Durable goods orders rose 1.0%, unrevised from the advance report.

Nondurable goods orders equal shipments in this report on manufacturing sector activity.

Manufacturing inventories fell 0.5% in July for the third consecutive monthly decline. Prior months' figures were revised. The ISM inventory index in August fell to 42.5 suggesting further decumulation last month.

Declines in inventories were widespread.

Factory shipments jumped 2.5% (1.6% y/y). Less the transportation sector shipments rose 2.2% (3.7% y/y. Shipments of computers and electronic products have been strong, up 7.3% y/y.