INSTANT VIEW: Jobless claims fall; durable orders down

NEW YORK (Reuters) - Weekly jobless claims fell below 500,000 for the first time since January and consumer spending rose more than anticipated, but durable goods orders were down 0.6 percent in October, underscoring the shaky road to recovery for the U.S. economy.

KEY POINTS: * New orders for long-lasting U.S. manufactured goods fell unexpectedly in October, according to government data on Wednesday that reinforced views of a gradual economic recovery from recession. * The Commerce Department said durable goods orders dropped 0.6 percent after rising by an upwardly revised 2.0 percent in September. New orders in September were previously reported to have increased 1.4 percent. * Analysts polled by Reuters forecast orders rising 0.5 percent in October. Durable goods orders are a leading indicator of manufacturing activity, which in turn provides a good measure for overall business health.

JOBLESS CLAIMS: The number of U.S. workers filing new applications for jobless insurance tumbled last week by a surprisingly large amount to the lowest level in more than a year, according to government data on Wednesday that gave fresh evidence the battered labor market is improving.

KEY POINTS: * Initial claims for state unemployment benefits slid to a seasonally adjusted 466,000 in the week ended November 21, from a revised 501,000 in the prior week, the Labor Department said. * Seasonal adjustments turned a smaller-than-anticipated unadjusted rise in claims into a drop, a Labor Department economist said.

PERSONAL INCOME AND CONSUMPTION: U.S. consumer spending rose more than expected in October as incomes increased, data showed on Wednesday, offering some hope at the start of the fourth quarter for the nascent economic recovery.

KEY POINTS: * The Commerce Department said spending increased 0.7 percent, after a revised 0.6 percent fall in September. Consumer spending in September was previously reported as slipping 0.5 percent. October's spending was above market expectations for a gain of 0.5 percent.

COMMENTS:

CARMINE GRIGOLI, CHIEF US INVESTMENT STRATEGIST, EQUITIES DIVISION, MIZUHO SECURITIES USA INC, NEW YORK:

"I'd expect the stock market to rally based on initial claims being substantially lower and consumer spending being higher. Overall I think this is what the market needs to reinvigorate the rally.

"Lately there have been concerns about the strength of the economic recovery and I think these numbers will help restore confidence to some degree.

"Lately the economic numbers have been coming out consistently disappointing and that has created some hesitancy in the equity market. This numbers are going to make investors feel a bit better."

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

"The jobless numbers are good news. It's good to see claims going down, though the labor market remains weak.

"The durable goods was somewhat weaker. We were hoping to see improvement on the industrial side, but that's something of a question mark.

"The market could see a bounce on the jobless number today, but I expect the gains to pare down toward the end of the day. People are looking ahead to Black Friday to see how much customers spend and if companies will still have to cut prices."

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK & CO, NEW YORK

"October durable goods unexpectedly fell, but September was revised up, twice the initial reading, putting the headline numbers over the two months about in line. Following 3 months of gains, orders of vehicles and parts fell 0.1 percent and declines in computers and electronics and machinery orders weighed on the number too. Net-net, the data remains lumpy as over the past six months, orders have been up, down, up, down, up, down. This is not typical of post-recession recoveries which have seen V bounces and provides further evidence that comparison to previous recoveries may not apply this time."

TOM PORCELLI, U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK

"I think bonds are reacting not to the claims but to the spending number.

"If you had a scorecard, I think it's two to one positive numbers, jobless claims and spending were good and durables were not so good.

"The preponderance of data is more positive than negative. That said, the durables report is very negative. Even those core numbers were negative. It's pretty ugly particularly given the fact that there are people out there looking to manufacturing to kind of drag the economy along.

"If you're trying to build a case for what's going to happen for the recovery, I think most people are looking for manufacturing to lead the way.

" claims have been improving. That's not a surprise. Spending I think there was probably some upside surprise waiting.

"This is a bad number among some pretty OK numbers. It just kind of throws some cold water on people hoping that manufacturing was just going to chug along."

TIM GHRISKEY CHIEF INVESTMENT OFFICER, SOLARIS ASSET MANAGEMENT, BEDFORD HILLS, NEW YORK:

"Somewhat mixed but overall it looks positive. Personal spending was above expectations, and personal income was also slightly above expectations and the prior was revised up. Certainly everybody is looking for the consumer to begin step up here a little bit in the economy, so this is positive data.

"Durable goods orders were somewhat inexplicably weak versus expectations although the prior period was revised up strongly, but certainly not a wash when you combine the two months together, so a bit disappointing in terms of durable goods - I think we need to see some of the details there.

"Then the PCE deflator, which is the Fed's favorite gauge of inflation, still showing a very slight increase in prices and slightly above expectations, but still a very low inflation environment. The initial claims were better than expectations, continuing claims were down.

"Futures are responding positively. Overall, its a good report although we need to see some of the details on durable good, which were surprisingly weak. But the market seems to be looking beyond that."

KATHY LIEN, DIRECTOR OF RESEARCH, GFT FOREX, NEW YORK

"The data was mixed but overall the market is taking it positively. Jobs are the most important thing, so they're latching on to the fact that jobless claims were below 500,000, which means we could see a better non-farm payrolls report going forward. We also saw stronger personal income and spending, with the only disappointment coming from durable goods. So on balance, it was more positive than negative. That should feed risk appetite, which is why the dollar hasn't rallied much against the euro or sterling but has pared losses a bit against the yen. We're probably going to see equities rise today, and while some of this is tied to pre-holiday positioning, traders are still at their desks until about noon so it may the beginning of a more meaningful uptrend for euro-dollar."

KENNETH KIM, ECONOMIST, STONE & MCCARTHY RESEARCH ASSOCIATES, PRINCETON, NEW JERSEY:

"Durables did come in weaker relative to expectations. It is the second drop in three months and it does appear that momentum in manufacturing is weakening as we move into the end of the year. The manufacturing sector bears close watching since it is considered a forward indicator for the economy."

RICHARD DEKASER, PRESIDENT, WOODLEY PARK RESEARCH, WASHINGTON:

JOBLESS CLAIMS: "This is not only improving the trend since March. This puts us on the cusp of job gains, if not in the month of November. The first month of job gain since the recession is not far off."

DURABLE GOODS: "I don't think there's any sugarcoating this. The improvement we've seen in recent months for the outlay of capital goods has been unsteady and tentative. It is waiting for a recovery to be more established. we are putting a floor; it's very intermittent."

MARKET REACTION: STOCKS: U.S. stock index futures rallied. BONDS: U.S. Treasury debt prices added to losses. DOLLAR: U.S. dollar trimmed losses against the yen.