A key labor report on July 7 confirmed improvement in the recession-gripped economy, showing the unemployment rate fell to 9.4% in July as job losses in the month narrowed to 247,000.
The Labor Department's much-awaited monthly report was better than expected by private economists, who had forecast a loss of 325,000 jobs and a jobless rate rising to 9.6% from the June level of 9.5%.
The report, seen as a key indicator of economic momentum, showed the number of unemployed fell slightly to 14.462 million from 14.729 million in June.
The goods-producing sector lost 128,000 jobs, including 52,000 in manufacturing. But the agency estimated the auto sector added 28,000 jobs due to recalls from extensive plant shutdowns earlier this year.
The services sector shed 119,000 jobs including 44,000 in retail.
Sectors adding jobs were education and health care (17,000); leisure and hospitality (9,000); and government (7,000).
The average workweek of production and nonsupervisory workers in the private sector, sometimes seen as a proxy for economic activity, edged up by 0.1 hour to 33.1 hours. The manufacturing workweek increased by 0.3 hour to 39.8 hours.
On the negative side, the number of unemployed for 27 weeks or more rose by 584,000 over the month to 5.0 million
The report "confirms that the recession is certainly diminishing in intensity if it hasn't ended already," said Peter Kretzmer, senior economist at Bank of America. "It appears unemployment may have hit its peak. We are starting to see the signs of a turning point, but it will take some time for job losses to diminish."
Robert Brusca at FAO Economics said the recovery appears at hand. "The jobs turnaround is actually about as rapid as you could hope to see," he said. "The transition from job losses to gains could come as soon as August."
The White House welcomed the news as a sign that the economy has pulled back from the abyss. "It is more evidence that we have pulled back from the edge and away from the brink of a depression," White House spokesman Robert Gibbs said.
The drop in unemployment even as job losses were rising is the result of two separate surveys, one of individuals and the other, smaller survey of employers. But it also reflects some discouraged workers leaving the labor force.
Eugenio Aleman, senior economist at Wells Fargo, said that the unemployment rate could rise as high as 10% even with an improving economy. "I was surprised about the unemployment number coming down to 9.4 percent, but that was because of people dropping out of the labor force, so that is probably not going to be repeated in the future," Aleman said. He argued that the jobless rate will likely rise in the coming months "because all those people who have been out of the labor force are going to come in because of better job prospects."
Copyright Agence France-Presse, 2009
