INSTANT VIEW: Jobless claims rise in latest week

NEW YORK (Reuters) - The number of workers filing new claims for jobless benefits rose by a more-than-expected 62,000 last week, government data on Thursday showed, as a year-long recession continued to chill the labor market.

New housing starts and permits tumbled to a record low in December, data showed on Thursday, accelerating a downward spiral that has left the economy mired in a recession.

KEY POINTS:

JOBLESS CLAIMS: * Initial claims for state unemployment insurance benefits increased to a seasonally adjusted 589,000 in the week ended January 17 from a revised 527,000 the prior week, the Labor Department said. * It was the highest level of initial claims since a matching reading in the week of December 20. * The last time claims were higher was in 1982, when they notched a weekly rise of 612,000. * Analysts polled by Reuters had forecast 540,000 new claims versus a previously reported count of 524,000 the week before.

HOUSING STARTS: * Housing starts fell 15.5 percent to a seasonally adjusted annual rate of 550,000 units, the lowest on record, from an upwardly revised rate of 651,000 units in November, the Commerce Department said. * That was the biggest percentage drop since January 2007, when housing starts fell 16.2 percent. * Analysts polled by Reuters had expected an annual rate of 610,000 units for December. * New building permits, which give a sense of future home construction, dropped 10.7 percent to 549,000 units, also a historic low, from 615,000 units in November. That was also sharply below analysts' estimates of 610,000.

COMMENTS:

MICHELLE MEYER, ECONOMIST, BARCLAYS CAPITAL, NEW YORK:

HOUSING STARTS: "They suggest we haven't seen the bottom in housing starts and builders will continue to pare construction in hopes of bring the market back to equilibrium. We should see a bottom in housing starts some time this summer.

JOBLESS CLAIMS: "They suggest another weak payroll report, which will be comparable to December. We think there will be a contraction in payrolls this year. We think the biggest decline will happen in the first quarter and there will a moderation in the pace of job cuts the rest of the year."

DAVID RESLER, CHIEF ECONOMIST, NOMURA SECURITIES INTERNATIONAL, NEW YORK:

"It is still disappointing to see housing starts and housing activity in this perpetual freefall. It is the time of year though that is very difficult, especially in this environment, you are not likely to see a lot of new activity underway. You are not likely to see a lot of new activity underway in the winter months of a recession. So I am not particularly surprised at the depth of the decline in housing starts, December was just a pitiful month for the economy.

"We had a couple of weeks of relatively low readings (in jobless claims), which may be attributable to the effects the holidays had on peoples' filings of claims, so we are probably seeing some catch up to that. I would not interpret this as an indication that there was this big jump in the number of people laid off in this particular week -- it may be that some people laid off in recent weeks have now completed their application process."

T.J.MARTA, FIXED INCOME STRATEGIST, RBC CAPITAL MARKETS, NEW YORK:

"It's hard to overstate how bad it is. The housing starts show we continue to extend the downside. These numbers are just off the charts horrendous. You can't exaggerate how bad things are.

"Initial jobless claims were worse than expected. Most of the layoff announcements haven't taken place so this number is going to remain elevated."

BORIS SCHLOSSBERG, DIRECTOR, FX RESEARCH, GFT FOREX, NEW YORK:

"It's obviously having a minor dent on equity futures right now and that's pressing euro-dollar to the downside. With jobless data, the hope is that it at least stops getting worse. To move from reverse to first gear, you first have to go to neutral. But there is still a big risk of more job losses ahead. That leaves equities the key today. If they go into another swan dive, euro-dollar will go back to recent lows."

OMER ESINER, SENIOR MARKET ANALYST, RUESCH INTERNATIONAL, WASHINGTON:

"Once again, we have a batch of dollar-negative data. Notable is the surge in jobless claims. The housing data is just as bad and it seems that there is no real floor in sight for that sector. On balance, the dollar is not expected to fall too much because the market has been bracing for dismal news anyway. And what has been underpinning the dollar is the market's prevailing risk aversion. Bad news out of the eurozone and Japan has benefited the dollar and that should continue despite bad U.S. economic data."

CHRISTOPHER LOW, CHIEF ECONOMIST, FTN FINANCIAL, NEW YORK:

"Awful, awful, awful. If you want a silver (lining) with these numbers, it's the slow pace of starts which will make it faster to work through inventory. But sales have fallen so much that inventory has not fallen. What needs to done now is more home sales but that's not going to happen any time soon when you have problem finding financing.

"On jobless claims, there are still holiday distortions so I wouldn't read too much in this week's number by itself. But what it does mean that a decline in early January was an aberration. The jobs outlook has not improved since the fourth quarter."

BOB WALTERS, CHIEF ECONOMIST, QUICKEN LOANS, LIVONIA, MICHIGAN:

"The fall in December housing starts is more of the same and shows even more weakness than expected. The housing market continues to be extremely troubled. There's a lot of medicine being pumped into the patient, but the question is when do we see a turnaround."

MARKET REACTION: STOCKS: U.S. equity index futures extend losses after jobless claims, housing data. BONDS: U.S. Treasury debt prices gain after data. DOLLAR: U.S. dollar extends loss vs yen after data.