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Markets Commentary pm

 

  • Chicago PMI Slumps Back Into Contraction; Election Blamed

Having wavered around the magical ’50’ level for much of the last year, bouncing off December plunge lows, Chicago PMI printed below expectations of 50.5 at a contractionary 49.3 – the 6th month of contraction in the last 12 months. With weakness in new orders (lowest since Dec 2015) and production (both back into contraction), MNI notes that on the heels of April’s decline, the latest results show activity stumbling in the second quarter, following only moderate growth in Q1.

united-states-chicago-pmi

  • Personal Spending Spikes Most Since Aug 2009 As Fuel Costs Surge

Thanks to the biggest monthly spike in energy spending since September 2005

With spending spiking and income rising only modestly – and thanks to revisions – the savings rate plunged in April

 

The Conference Board’s consumer confidence measure has hovered around the 95 level for the last 6 months (as gas prices dipped and ripped, as stock prices dipped and ripped, and as political chaos reigned). This ‘stability’ is in stark contrast to other surveys of confidence such as Bloomberg’s and Gallup’s which are both at multi-month lows… until today. Consumer Confidence plunged to 92.6 (missing expectations of 96.1 by the most since November). May’s dismal print (a 3 sigma miss) is below the lowest of 68 economist estimates as expectations slipped modestly but Present Situation tumbled with optimism on jobs sliding to 6-month lows.

Finally, government confidence data declines to other survey’s realities:

“Consumer confidence declined slightly in May, primarily due to consumers rating current conditions less favorably than in April,” said Lynn Franco, Director of Economic Indicators at The Conference Board.

 

Expectations declined further, as consumers remain cautious about the outlook for business and labor market conditions. Thus, they continue to expect little change in economic activity in the months ahead.

Charts: Bloomberg

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