A Royal Gazette story today is trumpeting the increase in car sales in November as a sign of economic recovery.
Any increase in retail sales, especially of big ticket items like cars, is good. The idea that people have held on to their vehicles longer because of the recession but now need to replace them is probably valid.
The November Retail Sales Index (RSI) reported that sales at motor vehicle stores had increased by 27.6 percent and this was the third November in a row which had seen an increase, as well as the third successive month to see a year-over-year increase.
So far so good. But sales in November were actually lower than they were in October, by around 20 percentage points, and so far this year, sales have declined year over in six of 11 months. Before the recent upsurge, sales had declined year over year for four consecutive months, which would have suggested a very different trend.
Part of the problem is that car sales are big ticket items in a small market. Glen Smith of Auto Solutions said the business had sold 31 vehicles to new arrivals since May, while Rayclan says it sometimes sell as few as three or vehciles a month. So with those numbers, one or two sales can make a difference.
The number to watch is the Index number for car sales. In November, it stood at 46.1, meaning that 53.9 percent fewer cars were sold in November than the average in 2006. That’s below the figure of 59.7 in October, but above the 45.3 average for 2012, which suggests that sales are at least bottoming out. At the moment, that’s probably the best we can hope for.