Jobs figures for July beat expectations

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Employers laid off fewer workers in July and the unemployment rate dipped for the first time in 15 months, providing signs that the country may be coming out of the longest recession since the Great Depression.

Stocks soared yesterday before settling back on a better-than-expected jobs report showing that nonfarm payrolls lost 247,000 jobs in July, less than the 325,000 expected, and unemployment edged down to 9.4 percent from 9.5 percent in June.

The Dow Jones industrial average rose 113.81 points, or 1.2 percent, to close at 9370.07, while the S&P 500 added 13.4 points, or 1.3 percent, closing at 1,010.48, a 10-month high. The Nasdaq composite gained 27.09 points, or 1.4 percent, to 2000.25.

"The worst may be behind us," President Barack Obama said. "Today, we're pointed in the right direction."

Economists had predicted that the unemployment rate would move up to 9.6 percent in July. Many, including the White House, still expect the rate to break 10 percent this year.

Companies will continue cutting jobs through the rest of this year, although the pace of layoffs will taper off, analysts say.

But yesterday's numbers could mean the worst is over and confidence will mend.

"This recession begins and ends with jobs," said James Cox, managing partner at Harris Financial Group in Colonial Heights.

"A 9.4 percent rate puts us into the realm that we may not get a 10 percent unemployment rate and we may have skirted the worst," Cox said.

The improvement in July could give some businesses the confidence to hire again, or not lay off more workers. And consumers, less anxious about losing jobs, could respond by spending more.

Consumer spending accounts for 70 percent of the economy. A boost in spending could pull the economy out of the doldrums.

"If you want to avert disaster, keeping job loss to a minimum is the most important," Cox said.

Yesterday's revisions added 43,000 to payroll figures previously reported for June and May.

It's important not to read too much into the numbers, said Pat Fishe, finance professor at the University of Richmond.

"We may not be losing as many jobs, but we still don't know if it will be a jobless recovery. If unemployment stays above 9 percent, that will be a hardship on the economy."

The main reason the unemployment rate declined last month was not encouraging. Hundreds of thousands of people left the labor force, discouraged by failed job searches. If laid-off workers who have given up looking for new jobs or have settled into part-time work are included, the unemployment rate would have been 16.2 percent in July.

The labor market has shed 6.5 million jobs since the start of the recession. In those 18 months, the population has continued to grow.

That means the economy must gain 9.1 million jobs to get back to pre-recession levels, said Heidi Shierholz, an economist for Economic Policy Institute in Washington.

Kent Engelke, chief economic strategist for Capitol Securities Management in Richmond, said the economy, which is expected to start growing again this summer, may start adding jobs in the first part of next year.

"It's possible that if the recession is not over, it is close to being over," he said.

The auto and housing markets will lead the country out of a recession, Engelke said.

The auto industry is poised to rehire workers to meet demand. "Housing has bottomed out and it is slowly, but surely recovering," he said.

"Since we are coming off such low levels, any upticks in housing and autos will be huge."

Yesterday's report showed the average workweek expanded to 33.1 hours in July from 33 hours in June. Workers' average hourly wages rose 3 cents, or 0.2 percent, to $18.56 from the prior month.

Contact Carol Hazard at (804) 775-8023 or .

The Associated Press contributed to this report.