The trend in new daily COVID-19 cases stopped increasing this week after two weeks of growth. Improving conditions are leading to rollbacks of restrictions, and economic activity is picking up. 

However, the jobless claims data last week were again mixed. New York and California, states that have not yet rolled back restrictions like other states, drove the latest small increase in jobless claims. 

March saw a jump in retail new and used sales that made the month one of the strongest in history. The growth in sales led to further declines in supply and corresponding increases in prices.

New-vehicle sales climb: Total new vehicle sales were up 59.7% in March with one more selling day compared to March 2020. The March SAAR was 17.7 million, a 55% increase from last year’s 11.4 million and a 13% increase from February’s weather-impacted 15.8 million. The March SAAR was the highest monthly SAAR since October 2017 when sales jumped following Hurricanes Harvey and Irma.

Combined sales into large rental, commercial, and government buyers were down 20% year-over-year in March and down 42% compared with March 2019. Including an estimate for fleet deliveries into the dealer and manufacturer channel, we estimate that the remaining retail sales were up 87% year-over-year in March and up 10.5% compared to 2019. The estimated retail SAAR of 15.4 million was up 83% from last year and up 15% from March 2019’s 13.4 million rate.

Vehicle inventory declines: New-vehicle inventories declined by 200,000 units in March to 2.4 million units, which was down 37% from March 2020. Days’ supply for March was 38, down 56 days from a year ago and down 15 days from February. Average car days’ supply came in at 42, down 39 days year over year and down 20 days from February. Light truck days’ supply was 37 last month, down 62 days from last year and down 14 days from the prior month.

Incentives fall: Average incentives declined 0.4% month-to-month to $3,416, which was down 15% from a year ago. Incentives as a percentage of average transaction prices decreased to 8.3%, from 8.4% in February, which was the lowest level since April 2015. The average transaction price in March was $40,472, which was down 1.5% from February but up 4.3% year over year.

Used-vehicle sales up: We initially estimate that used-vehicle sales were up 117% year over year in March. Compared to 2019, total used vehicle sales were down 1.8%. The March used SAAR was 40.5 million, up from 18.5 last March and up from February’s 38.0 million rate. The March used retail SAAR estimate was 22.2 million, up from 9.8 last year and up from February’s 20.8 million rate. This March bested March 2019, which had been the best March since the Great Recession. Compared to March 2019, used retail sales were up 4.6%. 

CPO sales in March increased 80% from a year ago and were up 36% February to March. March CPO sales were up 8% compared to March 2019 for the best single month for CPO sales results on record.

Wholesale used prices soar: The Manheim Used Vehicle Value Index (MUVVI) jumped 5.9% from February to March. The increase brought the Index to 179.2, which was a new record and 26.2% higher than a year ago. On a year-over-year basis, all major market segments saw seasonally adjusted increases in March, but pickups again outperformed the overall market. The weekly price data showed an acceleration in price gains as March progressed. The latest data so no sign yet of the acceleration peaking. Looking across leading indicators, we expect another 6-8 weeks of increases and likely new records on the Manheim Index through June. [Listen to a replay of the Q1 MUVVI call.]

Jobs data mixed: The latest traditional continuing claims data from the week ending March 26 fell by 16,000 to 3.73 million. The broadest measure of continuing claims, which includes pandemic unemployment assistance, has 18.2 million Americans still on unemployment benefits in the latest data. Initial claims for the week ending April 3 increased by 16,000 to 744,000 claims, and the prior week’s numbers were revised up. 

The increase in initial claims was driven by increases in two states: California and New York. We had two weeks of increases following the lowest claims week in the pandemic, and other data including the March employment report would suggest that we should be seeing declines.

Consumer sentiment improves: Consumer sentiment improved last week. Sentiment has gained more in the last 10 weeks than the remaining gap in sentiment from before the pandemic began. The daily index of consumer sentiment from Morning Consult gained more ground last week. The index as of last Friday was up 1.6% from the week earlier and is now up by 12.1% compared to the end of January and now down only 11.4% compared to February 29, 2020. More than half of the gap with the sentiment level pre-pandemic has been closed in the last 10 weeks.