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.

US-MAP
Conference Board confidence index 0 (3, 0), with -1 judgmental adjustment for composition of detail.
Chicago purchasing managers' index 0 (4, 0)

KEY NUMBERS:
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.

MAIN POINTS:
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.

Comments

[papaswamp]

Gallup poll of spending shows no improvement in spending $.

http://www.gallup.com/poll/142721/Consumers-Pulling-Back-Spending-August...

[HelluvaEngineer]

Not sure how many days this market can take off and then roll over before people quit buying into it.

[AssFire]

Meanwhile corporations' capital on the books is at a 50 year high.

Here is something: Small business owners will be working for less than 250k/year next year. Those that are taking a pay cut won't have the incentives to take risks or hire any people next year. I am taking all cash out this year and plan to dump any low profit customers. I don't need the headaches. Many businesses are planning the same.

[midtowng]

Hopium is a tough drug to quit.

[Miles Kendig]

Parents are happy school is back in session..  Now all of those extra summer expenses are done with.

[Herry12]

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