Tuesday, March 31, 2009

Consumer Confidence & Chicago PMI (Purchasing Manager’s Index)…

Consumer Confidence for March came in at 26 which was the bottom of the consensus range of 26 to 35, and only one point higher than the previous month. This reading is very, very low compared to historic norms.
Consumer confidence is holding steady at the very bottom with buying plans eroding further. The Conference Board's consumer confidence index edged slightly higher to a still deeply depressed 26.0 for March. Readings, outside of buying plans, show very little change though there is a very slight easing in pessimism over the jobs market, both the current assessment of the jobs market and the future assessment. But pessimism is still very deep with only 4.6 percent saying jobs are currently plentiful against 46.7 percent who say they are not plentiful.

Buying plans show continuing erosion in news that won't ease concern among retailers and the auto makers. Only 3.9 percent of the sample plan to buy a car in the next six months, down 8 tenths in the month. Those planning to buy a house fell to 2.0 percent from 2.3 percent while those planning to buy a major appliance fell 1 percentage point to 24.0 percent. The markets showed no significant reaction to the report which doesn't change the economic outlook and won't change expectations for another month of severe contraction in Friday's jobs report.

The Chicago Purchasing Manager’s Index for March came in the lowest in 29 years, falling to an index value of 31.4 versus 34.2 in February. The consensus range was 32 to 40, so this came in below that very large range and was below the worst forecaster’s forecast.

The Manufacturing ISM for March will come out tomorrow as will motor vehicle sales, purchase applications, ADP Employment, construction spending, and pending home sales.
(EconoDay) Highlights
Today's regional purchasers' report out of Chicago, in line with other regional surveys, shows deepening rates of contraction for the month. Chicago's headline index fell nearly 3 points to 31.4. Many components did show steady or even easing rates of contraction including employment which gained nearly 3 points but to a still severely contractionary level of 28.1. Destocking is still a priority of purchasers in the region with delivery times showing even fewer delays. A bad sign is continued contraction in input prices, at 34.1 from February's 37.8 in a result that won't ease talk over disinflation or outright deflation. Tomorrow's ISM report is up in the air: a good report, which this report doesn't point to, would further boost hopes that the economy is beginning to show improvement. A disappointing report would push back the outlook for recovery. The financial markets showed no reaction to today's report.

Market Consensus Before Announcement
The ISM-Chicago business barometer edged 9 tenths higher in February but remained at a still severely contractionary 34.2. This index has been stuck at such depressed levels for four straight months. New orders were little changed at 30.6 with backlogs showing slightly less contraction compared to January at 29.3.