INSTANT VIEW: Retail sales rise 1 percent in January

NEW YORK (Reuters) - Sales at U.S. retailers unexpectedly rebounded in January, government data showed on Thursday, likely boosted by post-holiday discounts and providing a glimmer of hope for the recession-hit economy.

The number of U.S. workers filing new claims for unemployment benefits eased last week but by less than expected, according to government data on Thursday that showed the labor market in the grip of a deep recession.

KEY POINTS:

RETAIL SALES: * The Commerce Department said total retail sales rose 1 percent, advancing for the first time in seven months, after slumping by a revised 3 percent in December, previously reported as a 2.7 percent decline. * January's increase in retail sales was the biggest since November 2007. * Excluding motor vehicles and parts, sales were up 0.9 percent after a revised record 3.2 percent decline in December, previously reported as a 3.1 percent drop, the department said. * The January rise was the highest reading since May 2008. * Analysts polled by Reuters had forecast January retail sales to fall by 0.8 percent. * Excluding motor vehicles, sales had been predicted to drop by 0.5 percent.

JOBLESS CLAIMS: * the number of people staying on the benefits rolls after drawing an initial week of aid the week ending January 31 was at the highest on record, the Labor Department said. * The department said initial claims for state unemployment insurance benefits slipped 8,000 to a seasonally adjusted 623,000 in the week ending February 7. * Analysts polled by Reuters were expecting 610,000 claims. * The previous week's claims were revised up to 631,000, the highest since the week ending October 30, 1982.

COMMENTS:

ROBERT BLAKE, SENIOR CURRENCY STRATEGIST, STATE STREET GLOBAL MARKETS, BOSTON:

"You are suddenly seeing some unexpected recovery in the U.S. economy in terms of consumer spending...so buy riskier currencies, buy the euro and sell the dollar and yen...sell safe havens.

"(The jobless claims) didn't fall quite as much as expected. I think the labor market is not going to recover until demand recovers. So it's really more important to watch retail sales than the jobless claims in terms of where the recovery is going to come from."

NIGEL GAULT, CHIEF U.S. ECONOMIST, GLOBAL INSIGHT, LEXINGTON, MASSACHUSETTS:

"At the very beginning of the year there were some seasonal adjustment quirks that were making the numbers look artificially good. I think that's the reason why we've had this extreme jump...

"The deterioration from the beginning of the year probably isn't as extreme as what is showing up in the claims numbers. But that said, what that's telling us is the underlying trend is bad and has been bad for a long time. And at the moment, unfortunately, it still seems to be getting worse. For job losses February could be worse than January.

(Retail) "Most people thought it was going to decline, so it's well above expectations... In part it's up because gasoline prices were higher. In part it's simply because these numbers are very volatile from month to month, and December was exceptionally low.

"We would not regard this as an indication of a beginning of a consumer revival. We would see this as a temporary correction after a very bad December."

SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR & ASSOCIATES, TORONTO:

(Retails sales and jobless claims) numbers will remain volatile until at least the middle of the year. With the fact that there is a little progress on the stimulus package, these numbers could add to some strength in the dollar as well as in the equity markets.

ZACH PANDL, ECONOMIST, NOMURA SECURITIES INTERNATIONAL, NEW YORK:

RETAIL SALES: "It is a bit of a puzzle because consumer fundamentals remain poor. Maybe retailers lured shoppers with aggressive discounting. Given the head fake with the November (reading), I'm reluctant to give too much weight on this report.

"Still it's a small piece of good news. Based on this figure, consumer spending in the first quarter could be better than the fourth quarter.

"There could be some seasonally adjustment issue going on during the month which added to the volatility."

JOBLESS CLAIMS: "It's still at an extremely high level which is consistent with another poor payroll report for the month."

SCOTT BROWN, CHIEF ECONOMIST, RAYMOND JAMES & ASSOCIATES, ST PETERSBURG, FLORIDA:

"Obviously that's a big surprise on the retail sales headline number, but the seasonal adjustment is a bit quirky and we know there were a lot of discount sales, while lower gasoline prices have helped retail spending in general. You also had downward revisions to the previous month, so you want to take the improvement with a big grain of salt.

"I am much more concerned about the elevated pace of jobless claims. The trend is moving higher.

"The long end of Treasuries is down, probably on the retail sales number."

DAVID WYSS, CHIEF ECONOMIST, STANDARD & POOR'S IN NEW YORK:

"Claims data remain extremely high, and this is a continued trend saying that this is a recession and getting worse. However, the retail sales will be a bigger story today. They're a surprise; we had expected a decline, so it's a very encouraging sign for the market.

"One month doesn't make a trend, but on the other hand, up is much better than down. I'd have to say this is a very encouraging number. I'm not ready to declare the recession over, but there is some hope that people aren't panicking as much as we thought they were.

"There were pretty substantial increases in retail sales in clothing sales, gas stations, but a lot of this is because of lower prices. I think profits will be lousy at retailers because they're discounting so heavily. But at least they're getting the goods off the shelves."

BRIAN DOLAN, CHIEF CURRENCY STRATEGIST, FOREX.COM, BEDMINSTER,

NEW JERSEY:

"It's a bit hollow, this data. The rebound in retail sales looks like a bounce-back after extremely weak numbers the prior month. The auto component was a big riser, and that doesn't compute given terrible auto sales. So it seems just a bit of a giveback. That said, it is the sort of tonic that can sooth the market to an extent. We've been keying on things not necessarily getting better but at least deteriorating at a slower rate. And this builds that case. For currencies, it feeds into the whole risk-on, risk-off strategy, and this number flashes risk-on."

MARKET REACTION: STOCKS: U.S. equity index futures pare losses after surprise rise in retail sales. BONDS: U.S. Treasury debt prices pare gains. DOLLAR: U.S. dollar trims gains versus euro, trims losses vs. yen.