RBC Financial Group says that today’s economic data shows that the U.S. economy has turned the corner.

“After a worrisome period when it seemed the pause in U.S. economic growth was turning into a more permanent hiatus, things seem to be back on track,” declares RBC. It notes that personal income in the U.S. increased by an expected 0.1% in October, and disposable personal income rose by 0.2%.U.S. consumers also increased spending in October, with consumption increasing 0.4%, slighter higher than markets anticipated. “While this is good news, much of the growth in expenditures was largely due to increases in non-durable and service spending. However, durable goods purchases fell for the second month in a row, suggesting that consumers may be showing some signs of fatigue as they head through the last quarter of the year,” it says.

BMO Nesbitt Burns suggests that U.S. consumer spending simply will not stay down for long, but it doesn’t see the October rebound as a turning point. “Even with the rebound in October, consumer spending is unlikely to be a big source of strength for Q4 GDP growth, with both likely to grow by just over 2% after a 4% pace in Q3. But while consumer spending has cooled, it is far from frosty,” it says.

Also, initial jobless claims continue to move lower, dropping 17,000 to 364,000 in the latest week. This cut the four-week moving average to 386,000. “The job market is stabilizing,” says Nesbitt. Additionally, the University of Michigan’s final November reading of consumer sentiment came in at 84.2, up from October’s nine-year low of 80.6, but down a bit from the preliminary November reading of 85.0.

On the producer side, RBC says that more good news confirmed what it long suspected, “that as soon as consumer confidence firmed up, business spending would follow”. After a 4.6% decline the month before, durable good orders increased by 2.8% in October, much stronger than market expectations.

“The rise in October durable goods orders does not get U.S. industries out of the woods just yet, but it sure fits into the gradual healing theme nicely,” says Nesbitt. “The bond market, quite correctly, is on the run. Stocks clearly liked these figures, which support the view that the U.S. economy is pulling out of its “soft spot” sooner than expected.”

Also, the Chicago Purchasing Managers’ Index for November also leaped up to 54.3 from 45.9 in October, signaling Chicago area factories are again in expansion mode. “These reports are a nice bit of pre-holiday news for markets south of the border. After some skittish signs the month before, the recovery in U.S. manufacturing seems to be back on track,” says RBC.

Durables news release http://www.census.gov/indicator/www/m3/adv/pdf/m3adv.pdf
Income and spending news release
http://www.bea.gov/bea/newsrel/pinewsrelease.htm