Goldman's Take: Confidence Number Weaker Than Headline Indicates As Rise Was All Due To Hopium Consumption
Confidence Higher; Chicago Lower; Both a Bit Softer than Headlines Suggest
BOTTOM LINE: Confidence index rises modestly, but all in expectations. Consumers' assessment of labor market conditions is actually slightly worse. The Chicago purchasing managers' index weakens in line with expectations in August, as indexes for new orders and production fall.
Conference Board confidence index 0 (3, 0), with -1 judgmental adjustment for composition of detail.
Chicago purchasing managers' index 0 (4, 0)
Conference Board confidence index up 2.5pts to 53.5 in August vs. GS 51.5, median forecast 50.7.
Chicago pm index down 5.6pts to 56.7 in August vs. GS 58, median forecast 57.
1. The Conference Board reported a 2.5-point increase in its index of consumer confidence, to 53.5. Although this was better than generally expected, the composition of the change was soft. In particular, the gain was all in expectations; the index of present situation fell to 24.9 from 26.4. Moreover, the split between those seeing jobs as plentiful vs. hard to get widened to -41.9% of the respondent sample from -40.7% (revised from -41.5%) previously. As a result, we have judgmentally adjusted the US-MAP reading to show no significant surprise, with the composition offsetting the better-than-expected headline.
2. The Chicago purchasing managers index fell by 5.6 points to 56.7 in August. The details of the report were in line with the weakened headline, if not a bit softer; the sub-indexes for new orders and production both declined considerably (by 9.4 points to 55.0 and by 7.4 points to 57.6, respectively) while order backlogs and employment fell modestly (by 1.4 point to 56.2 and by 1.1 point to 55.5). The supplier deliveries index rose from 59.4 to 61.2. The index of inventories - which does not enter the headline number - fell 4.3 points to 46.5.