You are in a bad position, and your manager is in the wrong position. This single act clearly indicates that he has a long way to go before he is ready for prime time. It sounds like your company is either overly eager to fill managerial slots on the organization chart, or it lacks adequate communication, education, and follow-up with the managerial staff.
Granted that you do not want to tell you manager how to manage, you can still discuss his babbling. One approach that may protect his ego and protect you is to mention that you are concerned with his openness. By using the word openness, you are already placing your comments in a positive context.
The next step is to mention that it is not really fair to your fellow employees for you to have this kind of information about them. And further, it may not even be fair to your manager himself, since other employees might be upset if they learn about this.
If he does not get this obvious message from you, there will be plenty of other messages that he is bound to miss as well. When this occurs, it should only be a matter of time before senior management sends him the clearest message of all.
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