The June Chicago PMI manufacturing index jumped to 65.7 from 59.4 and that was better than the estimate of 58. This is the best level since May 2014 but has gotten extremely volatile month to month. Smoothing out this out still puts the 6 month average at 58.1 vs 53.1 in 2016. New orders rose also to the best level since May 2014 and backlogs jumped to the most since July 1994 after being negative just 2 months ago. Inventories are at the lowest level of the year. Employment did moderate by a .5 pt as “Panelists were concerned about finding reliable, well qualified workers and there was a rise in temporary hires, a growing job market trend in recent months.” Maybe this is a possible reason why wage gains are muted while the labor market is tight. Inflation pressures were steady after falling for 3 months. Bottom line, June saw a nice rebound but this figure has been so jumpy month to month. Either way, the pace of manufacturing confidence is definitely running above last year as the post election lift has held.
CHICAGO PMI
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The final June UoM consumer confidence index was 95.1, better than the 1st print of 94.5 but still down 2 pts m/o/m and is at the lowest level since November. Similar to the Conference Board measure, the components were mixed as Current Conditions were up from May but the Expectations component fell to 83.9, the lowest since October when it touched 76.8 and vs 82.7 in September due to a decline in Business Expectations. Those expecting Higher Income was unchanged m/o/m but fortunately there were less people expecting Lower Income. Employment expectations fell 2 pts m/o/m. The category called “Country will have continuous good times over next 12 months” fell to the lowest since November, down 9 pts m/o/m.
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The answers to the labor market questions remain mixed. Those that said it’s a Good Time to Buy a House fell 2 pts m/o/m to the lowest level since August 2011. Those that said it’s a Good Time to Sell a House fell 6 pts but after rising by 7 pts in the month prior which was the most since 2005. Those that said it’s a Good Time to Buy a Vehicle rose 6 pts but after falling by 17 pts last month. Those that said it’s a Good Time to Buy a Major Household Item fell 3 pts m/o/m to match the lowest since October. Lastly, one year inflation expectations held at 2.6%.
Bottom line, while I think it’s important to look at the consumer confidence data, its only anecdotal and is never market moving because it’s not a good predictor of the economic activity to come. The UoM though did say this, “The combination of continuing improvements in personal finances and increasing concerns about the economic outlook is typical around cyclical peaks. Nonetheless, the data provide no indication of an imminent downturn nor do the data provide any indication of a resurgent boom in spending.”
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.