The final look at May UoM confidence came in at 73.6, a touch above estimates and up from the preliminary reading of 73.3 and up from 72.2 in April. The gain was lead by a rise in the Outlook as Current Conditions were unchanged. The one interesting tidbit within the data was one year inflation expectations which rose to 3.2%, up .3% from April and up from 3.1% in the preliminary report. It’s now at the highest level since Oct ’08 and comes at a time when many are talking deflation again. The survey was done within the last few days so it is a timely measure of sentiment. Of course it could easily reverse soon if economic concerns grow but consumers are not as sanguine as the Fed when it comes to the inflation outlook b/c consumers live in the real world and the Fed relies on government statistics.
The May Chicago PMI was a bit weaker than expected at 59.7 vs the forecast of 61 and its down from 63.8 in April. The figure overall however is still good as the 20 yr average is 54 but the components were mixed. New Orders fell by 2.5 pts to 62.7 and Order Backlogs showed a sharp drop, falling to 52.7 from 61.4 to the lowest since Dec. Employment fell sharply too, down by 8 pts to 49.2 and is below 50 for the 1st time since Dec. Inventories rose 6.3 pts to 56.4 to the most since Nov ’06. Prices Paid fell by 7.4 pts to 64, the lowest since Dec. Net-net, all eyes are on the May and upcoming June data as we search for any clues to see what impact the European slowdown will have on global growth. While this could be company specific, BCSI last night said they saw “across the board weakness in virtually every country in Europe starting in April.” Our eyes are peeled for more color from others.