Interest Rate Roundup

Tuesday, September 30, 2008

Chicago PMI dips, home prices fall further, confidence pops

While the credit crisis is grabbing all the air time and ink, we shouldn't completely ignore the flow of economic data. The latest news there:

* The Chicago Purchasing Managers Index slipped to 56.7 in September from 57.9 in August. That was slightly better than the Bloomberg consensus forecast of 53. The new orders subindex dropped to 53.9 from 60.2 (bad), while the employment subindex rose to 49.1 from 39.2 (good). The production subindex also ramped up to 71.4 from 63.4.

* The latest S&P/Case-Shiller figures (PDF link) show home prices falling 0.88% between June and July. That's better than the 2%+ readings we were seeing at the beginning of this year, but the largest monthly decline since April. Home prices in 20 top metropolitan areas fell 16.4% from a year earlier, up from the 15.9% decline reported for June. The hardest-hit markets are the same as before (Las Vegas at -29.9%, Phoenix at -29.3%, Miami at -28.3% and so on).

* Meanwhile, the Conference Board's consumer confidence index climbed to 59.8 in September from 58.5 in August. That was better than the 55 reading economists were expecting. The expectations index rose to 60.5 from 54.1, while the present situation index slumped to 58.5 from 65.

I doubt these numbers will continue to hold up, given what has happened in the stock and credit markets over the past few days. Incidentally, a subindex that takes the "jobs plentiful" reading and subtracts the "jobs hard to get" reading came in at -20.6 vs. -18.2 in August. So the underlying jobs market appears to be deteriorating. Also, the percentage of people who said they planned to buy cars (4.9% vs. 5.2% in August) and homes (2.1% vs. 3.4%) declined.


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