Instant View: Consumer confidence up in August

NEW YORK (Reuters) - U.S. consumer confidence rose modestly in August, lifted by a mild improvement in the short-term outlook, while business activity in the U.S. Midwest registered a slowdown in August.

CONSUMER CONFIDENCE:

CHICAGO PMI:

KEY POINTS: * The Conference Board, an industry group, said its index of consumer attitudes rose to 53.5 in August from an upwardly revised 51.0 in July. * The median of forecasts from analysts polled by Reuters was for a reading of 50.5. Forecasts ranged from 47.5 to 55.0. *

July's reading was revised up from an original reading of 50.4. The expectations index rose to 72.5 from 67.5 in July. The present situation index fell to 24.9, the lowest since February, from 26.4 in July. * The Institute for Supply Management-Chicago business barometer dropped to 56.7 in August. The reading was 62.3 in July, and economists had forecast an August reading of 57. * The employment component of the index fell to 55.5 from 56.6 in July. New orders fell to 55.0, from 64.6. A reading above 50 indicates expansion in the regional economy.

COMMENTS:

THOMAS SIMONS, MONEY MARKET ECONOMIST, JEFFERIES & CO., NEW YORK:

CONSUMER CONFIDENCE

"The number came in stronger than expected. It looks like the long end of the bond market is not doing quite as well as it was this morning.

"I'm at least modestly encouraged by the fact that the strength in the number came from an increase in the expectations index, what the six-months-out view of the world is. That improved while the present situation index declined.

"When we have confidence improving in the medium to longer term I think that bodes well for moderately increased consumer spending in the next few months, which will be obviously a huge positive for the overall economy."

ZACH PANDL, ECONOMIST, NOMURA SECURITIES INTERNATIONAL, NEW YORK:

"This small improvement is encouraging. It suggests that even though consumers remain in a glass-half-empty mood, sentiment isn't getting any worse. We wonder if this level of confidence will sustain if the labor market deteriorates as we suspect, but the improvement moderately reduces the odds the economy is slipping into a recession in the near term.

"We've got net reasonably good news this morning: A little bit better house prices, better confidence and a pretty close to as-expected manufacturing indicator. The economic data is neutral to slightly better than expected so we think this should be a small positive for the (stock) market."

TIM QUINLAN, ECONOMIST, WELLS FARGO SECURITIES, CHARLOTTE, NORTH CAROLINA:

CONSUMER CONFIDENCE: "It is a jump in the forward component that accounts for all the gain in the overall index. I don't view this as an excuse to be excited about the consumers.

"This means that we will have very slow growth in consumer spending. You will see much slower growth than past expansions. You still have one in 10 people who are unemployed and more of them who are underemployed. It is hard imagine why consumers would spend rapidly."

JOHN DOYLE, SENIOR STRATEGIST, TEMPUS CONSULTING, WASHINGTON:

"We got a surprisingly nice number from consumer confidence, given that sentiment has been so negative lately. But while the data paints a slightly rosier picture for the U.S., the trend is still for softer growth. In relation to the dollar, the data hasn't done too much. We're still trading with equities and people are still looking to the Fed minutes today and nonfarm payrolls on Friday. Those are the two big event risks this week."

ERIC KUBY, CHIEF INVESTMENT OFFICER, NORTH STAR INVESTMENT MANAGEMENT CORP, CHICAGO:

"It seems like the market is whipping around on every bit of data that comes out and this seemed to trigger a quick 50-point rally in the Dow. So again, modestly positive news, a little bit of a rally. It's another piece of evidence showing the economy, while it is not going on all cylinders, is also not sliding into this double-dip recession that people are concerned about.

"The day-traders are positioned this week for economic numbers that are going to be worse than consensus so because it wasn't worse than consensus you got a quick rally, probably short covering. It also tells you that we're really just in a traders' market. Each piece of news causes a reaction, then 15 minutes later people are looking for the next piece of news."

URI LANDESMAN, PRESIDENT, PLATINUM PARTNERS, NEW YORK:

"Consumer confidence is the second positive surprise we've had today, along with the Case/Shiller earlier. Does that mean we've hit the peak of bearishness yet? If not, we're probably close. The confidence isn't a great number, but it is better than expected. Obviously we'd rather beat than miss, and if you had held a gun to my head I would've expected us to go under the expectation, not over it. I think these two data points, combined, will prevent what would've been a pretty bad day. It also helps that we're seeing a lot of M&A, in both dollar amounts and the number of deals. That could be a real catalyst for this market."

DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY, CRT CAPITAL GROUP, STAMFORD, CONNECTICUT:

"Chicago came out on the weak side of expectations, with dips in all categories, but most strikingly in new orders. Offsetting that is the dip in inventories, so little risk of unwanted buildup.

"The bond market's trading off a tiny bit, with belly slightly underperforming wings. We don't sense a direction trade off this data and ascribe it to 'more of the same' with a read of softer tone to manufacturing seen by the prior Philly and Empire state figures."

WAYNE KAUFMAN, CHIEF MARKET ANALYST, JOHN THOMAS FINANCIAL, NEW YORK:

"PMI came in almost as expected, while the Case/Shiller was slightly better than expected, but I view these both as non-events. We're very oversold, and overly pessimistic. Even though Case/Shiller was better than expected, we went down to the 1,040 level and bounced off of it, meaning that this is a market driven by technicals.

"Friday's jobs report will obviously be real important for giving us direction, but the short-term bias is up, especially having such a bad August."

"Since the market is oversold, it's due to try and make a stand at the 1,040 support level. Right now, valuations are very attractive for stocks, but whether we continue from here depends on how corporate profit forecasts come in."

JIM O'SULLIVAN, CHIEF ECONOMIST, MF GLOBAL, NEW YORK

"Manufacturing is slowing with the global inventory rebuilding. This number is still pretty strong, but the regional numbers have shown slowing in August relative to July. We have the national ISM number falling but still above 50 with the Chicago number well above 50.

"By later this year, manufacturing should pick up. The recent slowing we have seen stems from the turmoil in the financial markets, but that's an overreaction to problems to a few euro-zone countries."

MARKET REACTION: STOCKS: U.S. stock indexes trimmed losses BONDS: U.S. Treasury debt prices were little changed DOLLAR: U.S. dollar fell against the euro and rose against the yen