The strength in employment is becoming more apparent. For the week ending November 1st, 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.