NEW YORK (Reuters) - Job growth grew modestly in January and gains in the prior two months were bigger than initially reported, supporting views the economy's sluggish recovery was on track despite a surprise contraction in output in the final three months of 2012. Employers added 157,000 jobs to their payrolls last month, the Labor Department said on Friday. There were 127,000 more jobs created in November and December than previously reported. The unemployment rate, however, edged up 0.1 percentage point to 7.9 percent.
Both December and November figures were upwardly revised. December to 196,000 from 155,000 and November to 247,000 from 161,000.
CARY LEAHEY, SENIOR ADVISOR, DECISION ECONOMICS, NEW YORK:
"The market sees job growth was 247,000 in November and 196,00 in December so 157,000 in January seems like a big slowdown. The market is concerned that further budget reductions with the sequester and also the loss of the 2 percent payroll tax credit could shut down the pickup in the job creation machine.
"The average gain in the previous months had hit that elusive 200,000 gain we'd all been looking for. So the market wonders whether the economy stalled a little in January.
"The market is concerned the fiscal tightening underway this year could already be reflected in the hiring slowdown in January."
FRANK LESH, FUTURES ANALYST AND BROKER, FUTUREPATH TRADING LLC, CHICAGO:
"It wasn't a bad number. Not what we expected but not a disappointment."
"We might see some profit taking (later in the day) but I don't see a reason for a selloff.
"We had a revision to the previous month so I think that helps mitigate some of the disappointment the number came not quite as strong. I see nothing that alters the view on economic policy, nothing to change anyone's outlook on the Fed or the economy."
TIM GHRISKEY, CHIEF INVESTMENT OFFICER OF SOLARIS GROUP IN BEDFORD HILLS, NEW YORK:
"Given the strong revisions in the prior month it really shows that employment continues to march upward, not at a significant pace but at a steady pace and that shows continued economic improvement and likely better economic numbers going forward given the purchasing power of more employment."
DARRELL CRONK, REGIONAL CHIEF INVESTMENT OFFICER FOR WELLS FARGO PRIVATE BANK IN NEW YORK:
"Like most of our jobs reports, it seems like every month, there is something for everybody in this one - there are positives and negatives. It was certainly below expectations and a slight negative that we saw a tick up in the unemployment rate from 7.8 to 7.9 percent, especially with the labor force participation rate staying where it is which suggests there aren't a vast influx of those unemployed/underemployed coming back being job seekers. That was disappointing."
VASSILI SEREBRIAKOV, CURRENCY STRATEGIST, BNP PARIBAS, NEW YORK:
"There are some positive aspects to this report in terms of the revisions in November and December, but January's figure was slightly below expectations. Overall I don't think this shows an acceleration in the labor market trend. We have seen Treasury yields dip a little bit and that is putting pressure on dollar/yen."
TODD SCHOENBERGER, MANAGING PARTNER AT LANDCOLT CAPITAL IN NEW YORK:
"The gains we've received on the January report is the start of positive readings for the foreseeable future. The first quarter has historically delivered surprises to the upside, so expect January revisions and February and March readings to be significantly positive. In addition, considering employers chose to somewhat delay hiring in November and December due to the Fiscal Cliff headwinds, today's report shouldn't be seen as a gigantic surprise to Wall Street due to spillover uncertainties with hiring decisions. Also, large and small businesses expanded office space by 2.2 percent in the fourth quarter, which is generally a sign of future hiring. Wall Street traders will applaud this data as the bull rally continues."
LARRY MILSTEIN, HEAD OF U.S. GOVERNMENT AND AGENCY TRADING, R.W. PRESSPRICH & CO., NEW YORK
"The whisper number was close to 200,000. It's a mixed bag. The market is trying figure how to trade this number. There were some shorts (in Treasuries) set up before the report and we saw some short covering afterward. If we stay below 2 percent on the 10-years by the end of the day, it will bode well for the market next week."
RUSSELL PRICE, SENIOR ECONOMIST, AMERIPRISE FINANCIAL, TROY, MICHIGAN:
"I would say it is very much in line with expectations. The upward revision to December and November were certainly positive implications as well for the job market.
"One thing is that it does tell us is that the GDP report the other day was really a fluke. The economy is growing at about a 2-2.5 percent rate that we've come to live in for the last three years and the employment market is making gains.
"We are slowing reducing the unemployment over time".
JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDEMARKETS, WOODCLIFF LAKE, NEW JERSEY:
"For two years the job market has shown no trend, for six months no variation. The economy is trapped between a wildly accommodative central bank and a profligate government. Hiring cannot accelerate until the economy does and the Fed's weaker dollar will not help the consumer, or in turn, employment."
JOHN KILDUFF, PARTNER, AGAIN CAPITAL LLC IN NEW YORK:
"The employment data is somewhat disappointing, as it represents a pullback from the trend toward job growth approaching 200,000 per month.
"The rise in the unemployment rate is also a negative.
"The upward revisions to 2012 were positive, especially the late year additions. The data does square with a rise in gasoline demand, as the newly employed drive to work. But, for crude oil prices, more gains in employment are necessary to support prices.
"Today's report is simply not good enough to support the thesis that a energy demand will be increasing as a result of improving employment levels."
JACK ABLIN, CHIEF INVESTMENT OFFICER, BMO PRIVATE BANK, CHICAGO:
"It's an impressive series of numbers and demonstrates that the economy is still shrugging off the difficulties it faces. This shows that underneath the surface, the fourth-quarter economy was really pretty good despite all the defense cuts. I think the private sector is leading the way. Clearly, the fiscal debate looming on March 1 will be a challenge, but if we can get a running head start, that will be supportive for stocks."
CRAIG DISMUKE, CHIEF ECONOMIC STRATEGIST, VINING SPARKS, MEMPHIS, TENNESSEE:
"It's not a bad report given all the headwinds from year-end. It's consistent with moderate job growth. It's a slight improvement, but it's still weaker than what it needs to be to really cut into unemployment. I had thought these revisions would be higher. All in all this points to better pace of job growth than I had thought."
MARK LUSCHINI, CHIEF INVESTMENT STRATEGIST AT JANNEY MONTGOMERY SCOTT IN PHILADELPHIA, WHICH MANAGES ABOUT $55 BILLION IN ASSETS:
"Nice revision upward, and this month came in right at the sweet spot where job growth is picking up, but not at the point where the Fed's quantitative easing program is threatened. It was weaker than expected but within the margin of error. The market may be at something of a top here, but we are rising on improved economic fundamentals so the rally has been rational."
TERRY SHEEHAN, ECONOMIC ANALYST, STONE & MCCARTHY RESEARCH ASSOCIATES, PRINCETON, NEW JERSEY:
"This is actually a really good number when you take into account the net upward revision. The payroll growth of 157,000 jobs was pretty much in line with market expectations, but we got a net upward revision of 156,000 over the course of the previous two months, which essentially doubles that. This places the fourth quarter in a much stronger light. Average weekly hours were flat, which was not unexpected. Average hourly earnings were up 0.2 percent. It's a modest gain, but it's a gain.
"The uptick in the unemployment rate to 7.9 percent isn't really significant. Unrounded, it's 7.923 percent. It's not wholly unexpected and the reduction in labor force slack is going to be a long, slow process."
SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK:
"January was pretty well along with expectations but the revisions are quite healthy, so it gives a positive bias to the numbers. The uptick in the unemployment rate is more likely noise than any change in trend. There is still not much progress on the unemployment rate but the underlying pace of improvement in payrolls is still there."
GRAPHIC: U.S. unemployment: The jobless rate rose to 7.9 percent in January. However, the percentage of unemployed who have been out of work 27 weeks or longer fell to 38.1 percent and the average unemployment duration dropped to 35.3 weeks, the lowest since December 2010. http://link.reuters.com/wam54t
(Americas Economics and Markets Desk; +1-646 223-6300)
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