The Chicago PMI continued to outperform in September. The headline index rose from 56.5 to 60.4, while the consensus was looking for a slight decline to 55.0. The index is still significantly above its LT average of 54.4 and is an outperformer compared to other regional business confidence indicators and the national ISM. The details are encouraging too with a sharp rebound in production (63.9 from 57.8), new orders (65.3 from 56.9), inventories (60.3 from 52.9) and employment (60.6 from 52.1). Order backlogs (45.4 from 49.6) and supplier deliveries (51.9 from 60.5) on the contrary deteriorated. Cost price pressures eased further as prices paid dropped from 68.6 to 62.3. The Chicago PMI is holding up surprisingly well, already for months. Other business confidence indicators came out more mixed. The manufacturing ISM today is forecasted to continue hovering around the 50 benchmark level, pointing to a stabilizing manufacturing sector.
The final figure of U. of Michigan consumer confidence showed a significant upward revision compared to the first estimate. The headline index was revised from 57.8 to 59.4, a significant rebound from the August plunge. The improved sentiment from the first reading might be due to less pessimistic sentiment on markets.
The strength in the July personal income and spending data proved unsustainable, as was expected. In August, personal income dropped by 0.1%, while the consensus was looking for a slight increase. The July data were downwardly revised from 0.3% to 0.1%. Weakness in the August figures was based in wages & salary, which dropped by 0.2% M/M. Personal spending came out in line with expectations, rising by 0.2% after an adjusted 0.7% increase in July. The core PCE deflator stayed unchanged at 1.6% Y/Y, still below but close to the Fed’s target, the direction is however upward.