Personal Incomes Healthy, Spending Decelerates Slightly, Inflation Contained, Job Market Still Healthy, Manufacturing Slows Slightly

- Personal Income for September rose .4% versus estimates of a .4% gain and an upwardly revised .4% increase in August.

- Personal Spending for September rose .3% versus estimates of a .4% increase and a downwardly revised .5% gain in August.

- The PCE Core for September rose .2% versus estimates of a .2% increase and a .1% gain in August.

- Initial Jobless Claims for this week fell to 327K versus estimates of 330K and 333K the prior week.

- Continuing Claims rose to 2588K versus estimates of 2534K and 2523K prior.

- ISM Manufacturing for October fell to 50.9 versus estimates of 51.5 and a reading of 52.0 in September.

- ISM Prices Paid for October rose to 63.0 versus estimates of 63.0 and a reading of 59.0 in September.

BOTTOM LINE: Consumer spending rose slightly less than forecast in September, Bloomberg reported. The core PCE, the Fed’s favorite inflation gauge rose 1.8% year-over-year, which matched the smallest gain since August 2004 and is within the Fed’s comfort zone. Spending on services, which included utilities, dropped .1%. I expect spending to improve modestly, incomes to remain healthy and inflation to decelerate further over the intermediate-term.

The number of Americans filing first-time claims for unemployment benefits declined last week, Bloomberg said. The four-week moving average of claims rose to 327,000 from 325,250. The unemployment rate among those eligible to collect benefits, which tracks the US unemployment rate, ticked higher to 2% from 1.9%. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.

Manufacturing in the US slowed slightly more than expected in October, Bloomberg reported. The New Orders component fell to 52.5 from 53.4 the prior month. The Exports component rose to 57 from 54.5 the prior month. I continue to believe manufacturing will help boost overall US growth over the intermediate-term as companies gain confidence in the sustainability of the current expansion and exports remain strong.