Instant View: Jobless claims fall in latest week

NEW YORK (Reuters) - The number of U.S. workers filing new applications for unemployment insurance fell as expected last week, resuming a downward trend that had been interrupted by the Easter holiday, government data showed on Thursday.

U.S. producer prices rose more than expected in March on strong consumer food and gasoline costs, but a small gain in the core measure pointed to tame underlying inflation, a government report showed on Thursday.

KEY POINTS:

JOBLESS CLAIMS: * Initial claims for state unemployment benefits dropped 24,000 to a seasonally adjusted 456,000 in the week ended April 17, the Labor Department said. * Analysts polled by Reuters had expected claims to fall to 455,000 from the previously reported 484,000, which was revised down to 480,000 in Thursday's report. * The four-week moving average of new claims, which irons out week-to-week volatility, rose 2,750 to 460,250. * The number of people still receiving benefits after an initial week of aid fell 40,000 to 4.65 million in the week ended April 10, the Labor Department said. * Analysts were expecting a fall to 4.60 million.

PPI: * The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate increased 0.7 percent following a 0.6 percent drop in February. * Analysts polled by Reuters had expected producer prices to rise 0.4 percent in March. * Compared to March last year, producer prices increased 6.0 percent, the largest advance since September 2008. * The year-on-year increase in March was a touch above market expectations for a 5.8 percent rise. * Stripping out volatile food and energy costs, core producer prices rose 0.1 percent last month, after February's 0.1 percent gain. * The core index had been forecast to rise 0.1 percent in March.

COMMENTS:

ANNA PIRETTI, SENIOR ECONOMIST, BNP PARIBAS, NEW YORK:

"I'm not overly worried (by the headline number) because if you look at food prices at earlier stages of the production pipeline, such as intermediate food prices, those were down for three consecutive months.

"I don't think this is a bubble as you saw a couple of years ago in term of food prices. It's just a moderate upward trend...

"Overall looking at the details it adds further evidence that price pressures are contained.

"It suggests that while consumer demand has rebounded, the pricing power of firms still remains limited. And that's what we have to take away from this report."

DAN COOK, SENIOR MARKET ANALYST, IG MARKETS, CHICAGO:

"The initial claims pretty much in-line with expectation, but still an awful number, that is just not a positive sign. Although that leads to speculation that maybe the Fed will stay backed off for awhile, so kind of mixed message there. For the U.S. labor market, still a terrible sign. And we've got nonfarm coming up in a couple of weeks so I'm sure we'll see how that translates into that.

"The actual PPI number though, is pretty decent. So we might see some decent moves on manufacturing. Overall, we are still going to be focused a lot on the Goldman stuff. I don't think these numbers were too huge and we still have existing home sales coming out a little bit later today. For the time being we are going to shelve these numbers, just because they weren't too extreme one way or the other, and kind of wait until we get into existing home sales and obviously every day we are going to find out more and more about Goldman and how that may impact the financials."

JACK ABLIN, CHIEF INVESTMENT OFFICER, HARRIS PRIVATE BANK,

CHICAGO:

"This is further evidence that the recovery is for real. It isn't surprising, since it is consistent with some of the blockbuster numbers we've seen in earnings.

"The big driver today is going to be Greece. There's going to be a tug of war between these numbers and Greece. Right now it looks like Greece is winning, since the numbers are mere puzzle pieces while the situation in Greece is an entire thing unto itself."

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK + CO, NEW

YORK:

"It seems that today's figure is clean of the seasonal distortions. But, there was a lull in the extension of employment benefits over the past few weeks due to the battle in Congress and thus some may have seen their benefits expire. On the other hand, hopefully many found new jobs. It will though take a few more weeks to see what the real figure is but the still elevated pace of initial claims says that while hiring is taking place, it is still muted. This also squares with the recent subdued confidence figures."

KIM RUPERT, MANAGING DIRECTOR, GLOBAL FIXED INCOME ANALYSIS,

ACTION ECONOMICS LLC, SAN FRANCISCO:

"PPI was certainly an unexpected surprise. It's a little bit worrisome but in this environment where we have a lot of excess capacity it's not going to be quite so troubling. But in conjunction with the drop in claims, which we've been waiting for quite some time, it could knock Treasury prices down a little a bit, inch up yields. Ahead of supply it might limit further safe-haven buying today."

TOM PORCELLI, SENIOR U.S. MARKET ECONOMIST, RBC CAPITAL

MARKETS, NEW YORK:

"We expect claims will continue to improve over the coming weeks.

"Headline (PPI) obviously driven by sharply higher food prices, energy also contributed to those gains.

"Core measure was only a tenth of a percent. Underlying driver for inflation for the Fed remains utterly tame.

"If food prices were moving on a path that was fundamentally a firmer one, if food prices were consistently rising at 2.4 percent, that would definitely catch the Fed's attention. But this is just one number.

"Yields had a little bit of a pop here following the numbers--I'm sure the market's reacting to the inflation number. But when you start to really pick through the data you realize that it doesn't really look as bad as the headline would suggest. CPI was utterly benign. At the end of the day, that's really probably more of a driver than what was happening at the wholesale level."

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

NEW JERSEY:

"Jobless claims were in line with expectations. The number is still holding up, so if anything there's need for a little more improvement to show signs of strength in the job market. On inflation, we look mostly at energy, which is the reason the headline PPI was a bit above expectations. But inflation is not on the radar screen, and there's no improvement on the jobs front. So that leaves the overnight 'risk-off' sentiment alive. The euro is weak for its own reasons, but the dollar in general should tend to do well against most pairs in this environment except against the yen."

STEPHEN GALLAGHER, CHIEF U.S. ECONOMIST, SOCIETE GENERALE, NEW

YORK:

"We had significant increases in food and energy costs that contributed to the jump in headline PPI, but the core is still flat. We still look for low inflation over the next few quarters."

"(Jobless claims) It's close to expectations. The drift higher seems to be coming to an end. The bigger story is that we have stalled in this 450,000 area. We need to see them break below 400,000 to be confident that job growth will be sustainable."

SCOTT BROWN, CHIEF ECONOMIST, RAYMOND JAMES & ASSOCIATES, ST

PETERSBURG, FLORIDA:

"The jobless claims numbers have been a bit higher in early

April, but there are some distortions there so you have to take it with a pinch of salt. I think there is a moderate downtrend.

"The PPI headline number was a little bit higher than expected, but the core is still pretty mild."

MARKET REACTION: STOCKS: U.S. stock index futures hold losses after weekly jobless claims, inflation data. BONDS: U.S. Treasury debt prices steady. DOLLAR: U.S. dollar holds gains versus euro.