New U.S. claims for unemployment benefits edged down last week, holding near four-year lows, according to a government report on Thursday that suggested the labor market was gaining momentum.

U.S. real personal spending flat in January

Americans' incomes rose 0.3 percent in January but taxes and inflation gobbled up the gains and consumer spending was flat after adjusting for price increases, the Commerce Department said on Thursday.

COMMENTS:

JOBLESS CLAIMS: It's another low reading which is good. Claims in January and February have benefited from a mild winter which has helped weather-sensitive jobs like construction. But we could see these numbers start ticking higher in March after the positive effect from seasonal adjustments fades. Still, we could see another 200,000-plus reading in payrolls and another drop in the unemployment rate next week.

PERSONAL SPENDING/INCOME: Consumer spending is off to a pretty weak start in the first quarter. That along with the most recent durables goods is painting a pretty weak picture for first quarter GDP despite the strong jobs numbers.

RAY ATTRILL, HEAD OF FX STRATEGY FOR NORTH AMERICA BNP PARIBAS NEW YORK

The softer income and personal spending is more of the standout. They are suggesting that the impact of higher consumer prices may be having an impact on real spending. Obviously the (jobless) claims numbers are consistent with some further reasonable labor market data heading into March. (The spending figure) is a bit of a nod to things aren't so rosy in the garden and the consumer is still facing significant headwinds here. Gasoline prices have hit $4 in New York. Obviously that takes a bit out of real income. More income spent on gasoline, less money to spend elsewhere.

PETER CARDILLO, CHIEF MARKET ECONOMIST, ROCKWELL GLOBAL CAPITAL, NEW YORK

I think personal income and spending came in the weaker-than-anticipated by in large, but this does not subtract the fact that the economy is improving. Jobless claims continue to be encouraging. But both data will have limited impact on the stock market. I think the big number that everyone is looking for is the ISM later in the day.

KEVIN CUMMINS, U.S. ECONOMIST, UBS SECURITIES, STAMFORD, CONNECTICUT

It sets up for a favorable employment report. It's consistent with our thought that the pace of job growth is picking up and accelerating. Chairman Bernanke mentioned that yesterday.

It does add to the evidence that the economy's got more momentum than people expect and we don't think there will be more quantitative easing and this data supports that.

DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS

There are hints of stabilization in a trend that has recently significantly improved, suggesting (the trend) in payrolls will maintain its recent improvement, but might not accelerate further.

WAYNE KAUFMAN, CHIEF MARKET ANALYST AT JOHN THOMAS FINANCIAL IN NEW YORK

Jobless claims were in line with expectations, so this is a non-event for trading.

(Americas Economics and Markets Desk)

Unemployment