INSTANT VIEW: Chicago PMI, UMich readings up in Aug

NEW YORK (Reuters) - Business activity in the U.S. Midwest expanded in August at a far more robust rate than expected as new orders jumped, a report showed on Friday.

U.S. consumer confidence rose to its highest in five months in August, posting an unexpectedly large recovery from depressed levels with the help of moderating energy prices, a survey released on Friday showed.

KEY POINTS:

CHICAGO PMI * The Institute for Supply Management-Chicago business barometer surged to 57.9 in August from 50.8 in July. Economists had forecast the index at 50.0, straddling the line between expansion and contraction. * The employment component of the index fell to 39.2 from 45.9 in July. Prices paid eased to 80.6 from 90.7 and new orders jumped to 60.2 from 53.5.

UNIVERSITY OF MICHIGAN: * The Reuters/University of Michigan Surveys of Consumers said its final index of confidence for August rose to 63.0 -- its highest since 69.5 in March. It was up from 61.2 in July and mid-August's preliminary reading of 61.7. * Economists had expected a reading of 62.0, according to the median of their forecasts in a Reuters poll. The 64 forecasts in the survey ranged from 60.5 to 64.0. * The index, which dates back to 1952, remains low overall, however, and still points to a difficult outlook for consumers. The index's record low was 51.7, which it hit in May 1980.

COMMENTS:

ALAN LANCZ, PRESIDENT, ALAN B. LANCZ & ASSOCIATES INC,

TOLEDO, OHIO:

"I don't see this data as enough to push the stock market higher. The market does not typically react too severely to these releases. The prior two mornings, the data was strong enough to turn a weak opening for stocks into strength that lasted throughout the day, but I don't think that will be the case today. And next week, I think things are going to be quite volatile, as I don't think that big swings in either direction will be sustainable."

LYNN REASER, CHIEF ECONOMIST, BANK OF AMERICA'S INVESTMENT

STRATEGIES GROUP, BOSTON:

CHICAGO PMI: "The manufacturing sector still seems to be holding up because of exports. That area accounted for half the growth in second-quarter GDP. It is an area that remains vulnerable to the slowing we are seeing in Europe, Japan and some emerging markets. Right now, U.S. companies are still competitive due to a competitive dollar."

REUTERS/U. MICHIGAN CONSUMER SENTIMENT: "Consumers are certainly worried about the job and housing markets but lower gasoline prices have given them some tangible relief and we are seeing that relief expressed in the various consumer confidence figures."

AL GOLDMAN, CHIEF MARKET STRATEGIST, WACHOVIA SECURITIES,

ST. LOUIS:

"The economic news is improving. The Chicago purchasing managers PMI was much higher than expected, 57.9, consensus was 50.

"From all indications, it is going to a garden variety recession, maybe longer than the usual 10 months because of the credit market problems. But there are a number of segments of the economy which are still doing well, so that holds it together.

Investors are in the process of trying to look beyond the valley of myriad problems to better times ahead."

MARKET REACTION: STOCKS: U.S. equity indexes pare losses BONDS: U.S. Treasury prices pare losses DOLLAR: U.S. dollar strengthens RATE FUTURES: Fed fund futures trim chances for 2009 rate hikes

EARLIER DATA FROM AUG 29:

US personal income falls unexpectedly in July