Last week the good news on the economy outweighed bad news. The good news:

• Industrial production fell 0.1% however industrial production remains on a positive trend.
• Manufacturing also rose 0.2%, led by strong gains in machinery (+1.3%), computer and electronic products
• Excluding vehicles, manufacturing rose 0.2%.
• Core industrial production, which excludes energy, high tech, and vehicles, rose 0.2%, as all of its components
• On a year over year basis, industrial production is up 4.0%, consistent with continued moderate output expansion.
• The Empire State General Business Conditions Index rebounded 4.0 points to 10.2 in November, indicating manufacturing activity in the region strengthened somewhat. New orders and shipments both advanced, but hiring decelerated and the average workweek shortened.
• The outlook for the next six months improved to its best level since January 2012. The capital expenditure outlook was the most positive in over two years.
• Prices were near-flat for the month and are expected to remain steady in the near-term

And the disappointing news on the economy:

• Mining, which accounts for about 16% of total industrial production, dropped 0.9%, the most in a year, likely driven by the sharp decline in oil prices. Energy output, which includes oil and gas well drilling, fell 0.8%.
• Utilities output fell 0.7%, its third decline in the past five months.
• The capacity utilization rate fell 0.3 percentage points to 78.9%, below the consensus of 79.3%, and 1.2 points below its 1972-2013 average. This indicates there is still some production slack in the economy, which puts downward pressure on inflation. Capacity utilization slipped across all three main categories.

The strength in employment is becoming more apparent.  For the week ending November 1^st, United States Initial Jobless Claims was 278,000 which was down 10,000 for the prior week’s level of 288,000.  This is now 8 straight weeks where jobless claims have come in below 300k.  The US unemployment rate dipped to 5.80 percent in October from 5.90 percent in September, which marks a six-year low.  Average hourly earnings increased 0.10 percent in October over the prior month while average weekly hours increased to 34.60 hours from 34.50 hours.  The labor force participation rate increased to 62.80 percent in October from 62.70 percent in September.  As we’ve reported in past commentaries there remains “slack” in the labor market, however as jobless claims remain below 300k and non-farm payrolls stay above 200k the underemployed number will continue to reduce.

According to FactSet, 446 companies from the S&P 500 have reported with the third quarter blended earnings growth rate coming in at 7.6%.  Blended revenue growth stands at 4.0 percent, slightly above the estimate of 3.80 percent.  US ISM Purchasing Managers Index (PMI) increased to 59 percent in October from 56.60 percent.  PMI is a measure of new orders, backlog of orders, new export orders, imports, production, supplier deliveries, inventories, customers inventories, employment and prices compiled from purchasing and supply executives.  In September, US factory orders decreased 0.60 percent and construction spending dropped 0.40 percent.

All in all, US data is quite positive.  The consumer is gaining strength as employment improves and lower energy costs translate to greater discretionary spending and raises their ability to borrow, corporate earnings growth remains a positive factor, and the Federal Reserve continues to keep rates low to drive the economy forward.