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New vehicle sales bounce back in 2017

New vehicle sales bounce back in 2017

Posted on: 1/17/2018 | Author: ATB Financial's Economics + Research Team

Consumer spending is always a great indicator of how the economy is performing, particularly since consumption drives such a large portion of the economy. One of the best data sets to watch is the dollar value of new car and truck sales.

In Alberta, sales in November totalled $877 million--up about 3.7 per cent compared to November of 2016. But a better way to measure the dynamics of spending on new cars and trucks is to look at a 12 month period and compare it with the same 12 months a year earlier. The graph below shows this.

The steady growth and increase in spending before the 2015 recession is clear in the data, with consistent annual growth of between eight and ten per cent. Some of that was driven by rising population and price inflation, but much of it was driven by strong consumer confidence. This ended abruptly in 2015 when the recession’s grip took hold. At its worst, total spending on new vehicles was down by more than 13 per cent.

The recovery in 2017, however, shows a return of consumer optimism. Total spending over the last 12 months is now higher by 16 per cent compared to the same period a year ago. That is consistent with other indicators (such as those in the retail and housing market) showing a general rebound in Alberta consumer confidence.

New vehicle sales, graph

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