After seeing negative September prints out of the manufacturing surveys in the regions of NY, Philly, and Dallas and about zero for Richmond and KC, today’s Chicago region posted a below 50 print of 45.7. That was down from 52.2 in August and well below the estimate of 51.8. This is the first trip below 50 since June 2020. As the details haven’t been posted yet to non-subscribers, I don’t have any internal data yet. Either way, ahead of next week’s national ISM, there is definite risk to the downside estimate of 52.4
Chicago PMI
The final September UoM consumer confidence index was 58.6 vs the initial read of 59.5 and vs 58.2 in August. This index bottomed at its record low of 50 back in June when gasoline prices were at $5.00. From August, Current Conditions rose 1.1 pts while Expectations were unchanged. One yr inflation expectations were 4.7% vs 4.6% initially and from 4.8% in August. The longer term 5-10 yr forecast was 2.7% vs 2.8% a few weeks ago and down 2 tenths from last month. On this, the UoM said “uncertainty over these expectations remained high, particularly given the mixed signals on prices, with energy prices falling and food prices rising.”
Employment expectations rose 2 pts m/o/m but the income component fell by 6 pts. The mean % of those ‘Expecting Family Income Will Beat Inflation Over Next 5 years” was 34.1% vs 35.1% in August and vs 31.5% in June.
With respect to spending intentions, they rose 1 pt each for auto’s and a house and by 4 pts for a major household item.
The bottom line from the UoM, “Even with tentative improvement in inflation expectations, consumer sentiment remains low by historic standards. Trends are consistent with a recession to come, particularly as developments overseas generate further downside risk to the economy…About 42% of consumers – lower income and higher income alike – continued to cite high prices eroding their living standards, down from a peak of 49% in July but more than double the 18% reading from a year ago.” The labor market continues to be the bright spot as “consumers reported little change in their outlook.”
For perspective, this index was at 101 in February 2020 and its record low was 50 in June.
UoM
One yr Inflation Expectations