The job cuts were much less than expected and the unemployment rate dropped for the first time since April 2008. "Non-farm payroll employment continued to decline in July (-247,000), and the unemployment rate was little changed at 9.4 per cent," the US Bureau of Labor Statistics said in a statement on Friday.
Interestingly, estimates indicated that over 300,000 jobs would be lost and jobless rate would touch 9.6 per cent in July.
In June, the unemployment rate touched a 26-year high of 9.5 per cent and 443,000 jobs were shed during that month.
Since December 2007 -- when the economy officially entered into recession -- payroll employment has fallen by 6.7 million.
Spurring hopes of revival in the job market, the average monthly job loss for May through July stood at 331,000, nearly half the count of job cuts during the November to April period.
There were 14.5 million unemployed people in the country in July, the official data showed.
The Bureau of Labor Statistics' Commissioner Keith Hall said the employment-population ratio was 59.4 percent in July.
According to the latest information, unemployment rates for adult men was at 9.8 per cent last month, while it was 7.5 per cent for adult women, teenagers (23.8 per cent), whites (8.6 per cent) and blacks (14.5 per cent), among others.
The number of long-term unemployed people -- those who have been without a job for 27 weeks or more climbed 584,000 to 5 million.
"Total non-farm payroll employment declined by 247,000 in July. From May to July, job losses averaged 331,000 per month, compared with losses averaging 645,000 per month from November to April," the statement noted.
The encouraging figures just weeks after official figures showed that US economy shrank one per cent in the second quarter of 2009, much less than expected.
"The change in total non-farm payroll employment for May was revised from (-) 322,000 to (-) 303,000, and the change for June was revised from (-) 467,000 to (-) 443,000," the statement noted.