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Auto sales were so strong in May it moved the needle on GDP

May auto sales crushed expectations.

In May, the pace of auto sales in the US rose to a seasonally adjusted annualized rate of 17.79 million vehicles according to Autodata, a new post-recession high and the fastest pace in almost 10 years.

Economists had expected sales to come in at a pace of 17.3 million. In May, all of the major carmakers reported better-than-expected sales increases or smaller-than-expected declines.

In a note to clients following the report, Jesse Hurwitz, an economist at Barclays, said, "We have been looking for a bounce back in consumption growth following the puzzlingly weak April data and today's sales reports from auto manufacturers suggest these gains are starting to materialize."

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The increase was so substantial, in fact, it moved the needle on Barclays' GDP tracking estimate.

On Tuesday, Barclays increased its estimate for second quarter GDP to 2.6% from an earlier estimate of as low as 2.3% after Monday's personal income and spending report.

This week is chock full of economic data, including the all-important May jobs report on Friday, and so these estimates are likely to change.

But on Tuesday, the auto industry is sending a seriously strong signal about the US economy.

June 2 COTD
June 2 COTD

(Barclays)

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