Economic data

The final reading of Oct UoM confidence at 67.7 was a touch below the preliminary figure out a few weeks ago of 67.9, is down from 68.2 in Sept and was slightly below expectations of 68. Confidence is now at the lowest level since Nov ’09. One year inflation expectations were 2.7%, up from 2.6% in the 1st Oct report and in line with the one year average. To get an idea of what’s behind these #’s, here is what people are asked, 1)Would you say that you (and your family) are better off or worse off financially than you were a yr ago? 2)Do you think now is a good or bad time for people to buy major household items? 3)Do you think that a yr from now you will be better off financially, or worse off, or just about the same as now? 4)On the economy, do you think that during the next 12 mo’s we’ll have good times financially or bad? 5)What’s more likely over next 5 yrs, continuous good times or not?

The Oct Chicago PMI was 60.6, 2.6 pts above estimates, up from 60.4 in Sept and is exactly in line with the 2010 average. New Orders rose by 3.6 pts to 65, the most since April. Backlogs were little changed at a touch below 50 at 49.2. Inventories rose 5.4 pts to 54.9, the highest since May and the 2nd highest since Nov ’06. This bears watching, especially with the rise in inventories vs shipments in Wed’s Durable Goods report. The economy saw a solid inventory rebuild phase over the past 1 1/2 yr’s and we must watch inventories to see whether its gone to far for now, assuming all else equal with end demand. Employment rose 1.2 pts to 54.6, above 50 for a 5th straight month but 2 pts off the recent high in July. Following the rise in commodity prices, Prices Paid spiked almost 14 pts to the highest since April. On Monday, the ISM will reconcile the regional surveys where NY, Dallas, Chicago and Richmond were better and Philly was soft.

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