Instant View: January core prices up 0.3

NEW YORK (Reuters) - U.S. incomes rose much more sharply than expected in January, while spending and core consumer price growth also outpaced forecasts.

Incomes rose 1.0 percent in January, marking their biggest gain in a year and doubling an unrevised 0.5 percent gain for December, while January consumer spending rose 0.5 percent after a 0.7 percent increase in December, the Commerce Department reported.

Analysts polled by Reuters had expected personal income to rise just 0.3 percent, and personal consumption expenditures to rise 0.4 percent.

KEY POINTS: - Core consumer prices rose 0.3 percent, outpacing forecasts for a 0.2 percent rise after an unrevised 0.1 percent gain in December. - The core prices were up 2.3 percent compared with a year earlier after an unrevised 2.2 percent 12-month gain in December.

JOBLESS CLAIMS: The number of U.S. workers filing for first-time jobless benefits rose 7,000 last week, pushing the four-week moving average of new claims to its highest level in more than a year.

Initial jobless claims hit a seasonally adjusted 338,000 for the week ended February 24. Economists polled ahead of the report were expecting claims to fall to 325,000 in the latest week.

COMMENTARY:

GARY THAYER, CHIEF ECONOMIST, A.G. EDWARDS AND SONS, ST.

LOUIS, MISSOURI:

"The jobless claims number was a little bit higher than expected, but was still in a range typical for a slow-growing economy. We're also in the period here where we had cold weather throughout much of the country and that could have affected claims on the upside. But it's still a relatively healthy level of new jobless claims compared to where we would be if the economy were in a recession when typically new jobless claims would be up around 400,000.

"The core PCE price number was still above the Fed's comfort zone on a year over year basis. This suggests that the Fed is probably going to hold interest rates steady for a while. The bond market, which was up in the morning on the weakness in stocks, may have softened a bit on the news. The good personal income number initially supported the stock market and dampened the safety bid in bonds."

ALAN RUSKIN, CHIEF INTERNATIONAL STRATEGIST, RBS GREENWICH

CAPITAL, GREENWICH, CONNECTICUT:

"Mixed U.S. data but on balance will still feed into market suspicions that there is some deterioration in the labor market (even allowing for dodgy seasonals for initial claims) at the same time as core inflation is proving a little sticky.

"Net-net, the market will view this data as playing slightly dollar negative in and of itself, but this will be quickly superseded by equity gyrations. Plainly the market remains extremely nervous, and risk appetite remains vulnerable to further retrenchment."

VICTOR PUGLIESE, DIRECTOR OF LISTED EQUITY TRADING, FIRST