Confidence About Jobs Best Since Before 9/11, Factory Orders Decline After Recent Gains

- Consumer Confidence for August rose to 105.6 versus estimates of 101.0 and a reading of 103.6 in July.
- Factory Orders for July fell 1.9% versus estimates of a 2.3% fall and a .9% increase in June.

BOTTOM LINE: Consumer confidence in the US unexpectedly rose in August as more jobs and rising incomes eased concerns about high gas prices, Bloomberg said. Americans are now more optimistic about finding jobs than at any time since the month of the terrorist attacks in 2001. The component of the index that measures consumers’ expectations for the next 6 months rose to 93.7 from 93.2. A measure of optimism about the present situation rose to 123.6, also the best since September 2001. The proportion of US consumers expecting to buy a new car in the next six months rose to 3.3% from 3.0%. This reading is a huge positive for investors and I continue to believe all measures of confidence will reach cycle highs during the fourth quarter.

US factory orders declined last month for the first time since January, reflecting less demand for aircraft, computers and machinery, Bloomberg reported. The decline follows a two-month surge. Orders for non-defense capital goods excluding aircraft, a measure of future business investment, declined 4.1% versus a 4.9% gain the prior month. The inventory-to-shipments ratio held at 1.19 months in July. Unfilled orders rose 1.0% after a 2.8% gain in June, which also points to rising production next quarter. I expect factory orders to accelerate next month.