INSTANT VIEW: U.S. jobless claims, consumer spending rise

NEW YORK (Reuters) - The number of U.S. workers filing new claims for jobless benefits rose last week, government data showed on Thursday.

U.S. consumer spending rose at its fastest pace in nearly 8 years in August, advancing for a fourth straight month, according to a government report on Thursday that pointed to a rebound in spending in the third quarter.

KEY POINTS:

JOBLESS CLAIMS * Initial claims for state unemployment insurance rose to a seasonally adjusted 551,000 in the week ending September 26 from a revised 534,000 in the previous week. * Analysts polled by Reuters were expecting claims of 530,000, which would have been unchanged from the previously reported figure. * The four-week moving average of new claims fell to 548,000, the lowest since 547,000 reported in the week ending January 24. * A Labor Department spokesman said there were no unusual factors affecting the latest week's data.

PERSONAL INCOME * The Commerce Department said spending jumped 1.3 percent, the largest gain since October 2001, after a revised 0.3 percent increase in July, previously reported as up 0.2 percent. * That compared to market expectations for a 1.1 percent gain in spending, which normally accounts for over two-thirds of U.S. economic activity. * Adjusted for inflation, spending rose 0.9 percent in August, also the largest increase since October 2001, after rising 0.2 percent.

COMMENTS:

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:

"Jobless claims moved too much in the wrong direction so the improvement so far in October is less dramatic than was expected. Indications for the September employment number due tomorrow don't encourage optimism about the employment outlook because the path of initial jobless claims is no longer downward. The count of continuing claims in the September survey week was also revised up which is unambiguously bad news. September U.S. employment forecasts may be revised to show less improvement than previously thought."

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

NEW JERSEY:

"(Jobless claims) never really have improved very significantly over the last few weeks, so this is just a little bit of a slip back.

"What counter-balances them is better-than-expected personal income and spending, so we're left with a little bit of a mixed signal here.

"Overall, though there's very little sign of a tangible improvement in the labor market and with the nonfarm payrolls looming tomorrow, I think the focus is going to be skewed more to disappointing result that the rate of job losses may not decelerate any further at this stage.

"What we're seeing in terms of the FX fallout is a little bit of a selloff in the risk assets, and therefore a little bit of a better dollar and lower yen crosses."

ART HOGAN, CHIEF MARKET ANALYST, JEFFERIES & COMPANY, NEW

YORK:

"This is a very packed day for data. First and foremost, the Challenger cuts were down significantly for the 4th month in a row. Then, personal income and spending were both better than expected. That's encouraging. But remember, that data was for August, which had the tail end of cash for clunkers in it.

"For jobless claims, you're going to see a lot of volatility in this number. You need to put the 551,000 figure into perspective. It doesn't move the 4-week moving average much, so I'm not too troubled by it. The continuing claims line is down relatively significantly.

"On balance, the market is going to look at the data with a negative view, but that can turn around, especially with ISM data coming out at 10. It's an awkward way to play this, but when the 8:30 data has a negative bent the market might open down, but then we could turn around with ISM. There are low expectations for ISM because of the disappointing PMI data we had yesterday. If we get an upside surprise in ISM, I think we'll turn higher."

WILLIAM LARKIN, FIXED INCOME PORTFOLIO MANAGER, CABOT MONEY

MANAGEMENT, SALEM, MASSACHUSETTS:

"For the market, the personal consumption data is sub-tiered to the jobless claims. That is the overriding number because it is the morning before the monthly jobs data tomorrow, and the red light is flashing. The (jobless) trend is definitely problematic."

KEVIN FLANAGAN, FIXED INCOME STRATEGIST FOR GLOBAL WEALTH

MANAGEMENT, MORGAN STANLEY IN PURCHASE, NEW YORK:

"Jobless claims figures are up more than anticipated, which underscores that although we have seen improvements in the monthly statistics, the labor markets remain the weak link in this recovery process. It will be a while before they provide any kind of support, especially to consumer spending.

"It's a little bit better read on the income and consumption front. I don't think the market will get overly excited about this."

CAMILLA SUTTON, SENIOR CURRENCY STRATEGIST, SCOTIA CAPITAL,

TORONTO:

"Better-than-expected releases which will help to boost expectations for third-quarter GDP. The ongoing trend for the dollar remains intact."

MARKET REACTION: STOCKS: U.S. stock index futures extend losses BONDS: U.S. Treasury debt prices extend gains DOLLAR: U.S. dollar holds gains versus euro