Economic data

Nov Consumer Confidence was slightly better than expected at 54.1 vs the forecast of 53 and is up from 49.9 in Oct. It’s the best since June. The gain was mostly led by the Expectations component which rose to the highest since May rising 6.7 pts while the Present Situation was up just .5 pt. The answer’s to the labor market questions were mixed as those that said they were Plentiful rose .5 pt to a 3 month high but those that said jobs were Hard to Get rose to the highest since Feb. The difference was those that said jobs were Not So Plentiful which fell to the lowest since Feb. Those that said Business Conditions were Good fell and those that said they were Bad rose, both slightly but 6 mo’s hence pointed to better conditions. Disconcertingly, those that plan to buy a home within 6 months fell, matching the lowest since 1982. Those that plan to buy a car though rose to a 6 mo high. One yr inflation expectations were 5.1%, the highest since May.

The Nov Chicago PMI was 62.5, above expectations of 59.9, up from 60.6 and the best since April. It follows the better than expected Philly, Richmond and Dallas manufacturing surveys and the lone standout on the downside, the NY survey. The ISM tomorrow will reconcile all the regional data. New Orders rose 2.2 pts to 67.2, the highest since May ’07 but Backlogs fell a touch to 48.9. Production, which follows orders, rose to the most since early ’05. Inventories fell back below 50, falling 6.5 pts to 48.4. Employment rose 1.7 pts to 56.3, a 4 month high. Reflecting the rise in commodity prices, the Prices Paid index rose almost 2 pts to 70.7, the highest since April. Bottom line, the # was a definite positive but the manufacturing crystal ball becomes cloudy over the next 6 mo’s as the inventory build story is played out, Europe is weighed down by its own issues and Asia fights inflation with rate hikes. US end demand will also be key.

S&P/CS said their 20 city home price index fell by .8% m/o/m in Sept, twice expectations. The y/o/y gain was .6% vs the forecast of a rise of 1.0%. The overall index did fall to a 4 month low and is now 5.9% off the recent low in Apr ’09 but remains 29% below the high in July ’06. On a y/o/y basis, 5 of the 20 cities saw gains, of which were San Francisco, San Diego, Washington DC, LA and Boston while the declines were led by Chicago, Tampa, Charlotte, Portland and Las Vegas. Bottom line, soft housing market data is not a surprise to any of us but there is a debate of whether housing prices are in the bottoming process or whether we’re in a lull before the next leg down. With the inevitable foreclosure process soon getting underway more in earnest after the recent slowdown, assuming paper work and bank issues get resolved soon, we’ll likely see another increase in inventories and thus softer prices in the aggregate.

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