NEW YORK (Reuters) - U.S. employment growth rebounded less than expected in January and job losses the prior month were deeper than initially thought, strengthening the argument for additional relief money from the government to aid the recovery from the COVID-19 pandemic. The Labor Department said on Friday nonfarm payrolls increased by 49,000 jobs last month. Data for December was revised to show 227,000 jobs lost instead of 140,000 as previously reported. STORY: MARKET REACTION: STOCKS: U.S. stock index futures briefly pared gains and were last 0.43% higher, pointing to a firm open BONDS: Yields on benchmark 10-year notes initially slipped but then climbed back to 1.1807%. Two-year Treasury yields slipped to 0.1132% FOREX: The dollar index was 0.3% lower, COMMENTS: THOMAS HAYES, CHAIRMAN, MANAGING MEMBER, GREAT HILL CAPITAL LLC, NEW YORK “When you look at the losses it’s concentrated in retail, leisure and hospitality and health care, particularly in health care and nursing homes, so this is all COVID-related issues. “The market is just looking through this short-term disappointment. It’s very hard to get too pessimistic about downward revisions when you have three tailwinds at your back, namely the stimulus, the vaccinations and cases and earnings, with estimates going up.” QUINCY KROSBY, CHIEF MARKET STRATEGIST, PRUDENTIAL FINANCIAL, NEWARK, NEW JERSEY (email) “While the headline number of 49,000 new jobs, coming primarily from the government, was disappointing, the markedly higher — 80,000– new temporary jobs suggests that economic activity is picking up in the broader economy. Temp hiring is historically an accurate indicator that permanent hiring should gain strength as confidence in the direction of the economy gains momentum.” STEVEN RICCHIUTO, U.S. CHIEF ECONOMIST, MIZUHO SECURITIES USA LLC, NEW YORK “When you look at the disappointing jobs numbers, you have to remember this time of year there’s lot of seasonality in terms of holiday workers that traditionally come off, in terms of education-related employment. “The big thing is it’s inconsistent with other data we’re receiving: the employment numbers from IMS data are all stronger, the indications from the consumer confidence data, in terms of plentiful jobs hard to get, are all supporting a higher payroll number than this. The household survey, on the other hand, is showing you a big drop in the jobless rate at 6.3%.” “The net read on this is it supports a steeper yield curve… The weaker the data the more likely you get stimulus. The big thing is the curve.” SAMEER SAMANA, SENIOR GLOBAL MARKET STRATEGIST, WELLS FARGO INVESTMENT INSTITUTE, ST LOUIS (email) “Job growth slowed markedly in January, and the previous two months’ revisions were also to the downside. It is worth noting that the unemployment and underemployment rates both fell, however some of that may be due to a decrease in the participation rate.” “Other internals also indicated that things may not be as bad as the headline suggests with wages and the average workweek both ticking higher.” “These data points show that the labor market has softened in the past few months and the need for fiscal stimulus remains high.” “We continue to believe that Congress will pass another aid package, and along with the broader economic recovery and reopening should support equity markets.” TOM DI GALOMA, MANAGING DIRECTOR, SEAPORT GLOBAL HOLDINGS, GREENWICH, CONNECTICUT “If you look at the unemployment rate, which I think is the larger factor in this number, we had a pretty significant drop. So I think the overall reaction later on today will be, after the initial buying and short covering gets done in the next hour or so, the (Treasury) market probably heads toward higher yields ahead of next week’s supply.” JUSTIN LEDERER, INTEREST RATE STRATEGIST, CANTOR FITZGERALD, NEW YORK “The market was heavy into (the data), there has been a continued backup, especially after the COVID relief bill. We got a little bit of a pop here, I think the overall number’s mixed. The headline was weaker, the unemployment number lower, hourly earnings not bad. Net-net the overall reaction has not been massive in Treasuries…Overall you have to take into context that data’s going to be a little more volatile over the next few months as we continue to see how COVID restrictions ease, etc.” JJ KINAHAN, CHIEF MARKET STRATEGIST, TD AMERITRADE, CHICAGO “I’m amazed with how well (analysts) predicted it. With the economy closing and opening, predicting (employment data) has been difficult. You can see there’s been very little market reaction. “One of the things I thought surprising was healthcare losing jobs. Some of it could be fewer home care visits. “In the last report retail held up well and this month it’s worse than expected. We know brick and mortar has continued to suffer. As we head into the spring and the summer with leisure and hospitality, we’ll see many of those jobs coming back but that will take some time. I have to think many of these companies won’t open again but many new ones will open. “This is the first month that some people got the vaccination and my hope is when more people get the vaccine employment will return, particularly in customer-facing roles.” SUBADRA RAJAPPA, HEAD OF US RATES STRATEGY, SOCIETE GENERALE, NEW YORK “The jobs report isn’t bad. You should expect a lot of volatility at a time like this. This is as close to consensus as it possibly gets.” “Perhaps there was some quick profit-taking in the bond market. The expectation was that we could get a good number today.” “We’re very much on track to achieving that 5% unemployment rate the Fed was hoping to get to this year. For Democrats who want to pass the stimulus package they can point to these numbers as showing the need for it. Republicans can point to the unemployment rate going lower.” STEVE RICK, CHIEF ECONOMIST, CUNA MUTUAL GROUP, MADISON, WISCONSIN (email) “I’m not at all shocked that these January numbers didn’t quite hit expectations. This is likely a negative trend that we should brace ourselves for until we are able to make meaningful progress on the vaccination front, and until regions are able to make solidified progress on reopening plans. The business landscape is changing; US factory activity is currently operating at a 13 ½ year high yet factory employment remains more than 500,000 below February 2020. Moreover, business closures and consolidation will lead to long-term structural unemployment and economic scarring. With these hurdles, it could at least two years before we return to the number of nonfarm payrolls we had in February of 2020.”