Tracey Johnson
The US economy lost 247,000 jobs in July, far fewer than analysts had expected, official figures show.
With fewer workers being laid off, the unemployment rate fell to 9.4%, down from 9.5% in the previous month, the first drop since April 2008.
The unexpected drop is likely to fuel hopes that an economic recovery is gaining ground.
US President Barack Obama said the jobless numbers showed that "the worst [of the recession] may be behind us".
The figures were better than feared,
but still depressing for those affected.
"[But] we have a lot further to go. As far as I'm concerned, we will not have a true recovery until we stop losing jobs," he added, echoing comments made last week.
Since the recession began in December 2007, about 6.7 million jobs have been lost, the Department of Labour said.
The president also stressed that economic meltdown had been avoided.
"We are losing jobs at less than half the rate we were when I took office. We have pulled the financial system back from the brink.
"While we have rescued our economy from catastrophe, we have also begun to build a new foundation for growth."
Analysts had expected non-farm payrolls to drop by 320,000 in July and the unemployment rate to rise to 9.6%.
Revisions
Official figures showed job losses for July were spread across all sectors, though just 52,000 jobs were lost in manufacturing, the first time since September that manufacturing losses were fewer than 100,000.
Jobs continued to be added in the education and health services, with 17,000 more posts for the sector during the month.
The construction industry saw 76,000 fewer jobs for July, though the drop was less than predicted.
Analysts attributed the lower rate of contraction to the government's stimulus package, which helped boost infrastructure schemes.
Revised data also showed fewer jobs were lost in June and May than had been thought. Employers cut 303,000 positions in May, less than the 322,000 previously estimated. And in June 443,000 jobs were cut, revised from an earlier figure of 467,000.
"Because layoffs in auto manufacturing already had been so large, fewer workers than usual were laid off for seasonal shutdowns in July," Labour Commissioner Keith Hall said.
The average working week rose to 33.1 hours in July from June's level of 33 hours. In the manufacturing sector, the average working week climbed to 39.8 hours from 39.5 hours in the month before.
Average hourly earnings rose to $18.56 in July, up from $18.53 in June.
