08:15 AM EDT, 09/18/2024 (MT Newswires) -- Canadian vehicle sales in July were 1.76 million units at the seasonally adjusted annual rate, up 3.7% m/m from the recent seasonally adjusted low in June when sales were likely negatively impacted by the CDK software disruptions, said Scotiabank.

Total non-seasonally adjusted sales for Q2 were previously revised upwards by 6.6%, resulting in the highest unadjusted volume for a single quarter since Q3 2019.

In August, year-over-year sales growth was 1% non-seasonally adjusted, remaining positive for the 20th consecutive month. While annual growth in auto sales is still positive, it has slowed considerably from the more than 10% year over year through the six months ending April 2024 as economic headwinds persist, stated the bank.

The recent pace of job gains in Canada has slowed through the summer, averaging 6,000 seasonally adjusted per month for the three months through August, and the unemployment rate rose to 6.6% as the labor force continues to grow faster than jobs added. This softening in the labor market is having the biggest impact on the youth category -- aged 15-24 -- and recent immigrants, according to Scotiabank.

Meanwhile, growth in the average hourly wage rate for permanent employees -- 5.5% month over month SAAR, 3mma -- continues to outpace inflation. These real inflation-adjusted wage gains and rising personal savings should support domestic consumer spending, added the bank.

Additionally, the Bank of Canada is continuing to ease monetary policy, having cut the overnight rate by 25 basis points at each of the past three scheduled meetings, lowering the overnight rate to 4.25% at the Sept. 4 meeting. Scotiabank is expecting a further 50 basis points of cuts this year, with further easing into 2025.

The bank's outlook for Canadian auto sales is 1.78 million this year and increasing to 1.8 million in 2025 as interest rate headwinds unwind.