INSTANT VIEW: Jobless rate highest in 4 yrs in July

NEW YORK (Reuters) - The U.S. unemployment rate climbed to 5.7 percent in July, its highest in more than four years as employers cut payrolls for a seventh month in a row, though less severely than predicted, according to a government report in Friday.

KEY POINTS:

* The Labor Department said 51,000 non-farm jobs were eliminated in July, bringing losses for the year to 463,000.

* Analysts polled by Reuters had expected the 75,000 jobs to be cut last month but had forecast the unemployment rate would rise only to 5.6 percent.

* The unemployment rate in June was 5.5 percent.

* The department revised its estimates for job losses in each of May and June.

* It said 47,000 jobs were cut in May instead of 62,000 and 51,000 in June rather than 62,000 - a total 26,000 fewer jobs lost in the two months than previously thought.

COMMENTS:

CARL LANTZ, U.S. INTEREST RATE STRATEGIST, CREDIT SUISSE, NEW YORK:

"It looks like we have this continued pattern where more people are coming into the labor market looking for work.

"For any given household people who weren't at work before are now working to try to make up the gap in income, so you had a 213,000 rise in the labor force.

"It's a bit of a mixed bag. On the margin it's probably a little better than what the markets had feared going into it, but it's not a slam-dunk positive by any means.

"We're still in this limbo. The Fed can't ease, the Fed can't hike."

DOUG ROBERTS, CHIEF INVESTMENT STRATEGIST, CHANNEL CAPITAL RESEARCH, SHREWSBURY, NEW JERSEY:

"Wall Street breathed a sigh of relief because the employment news was bad, but not terrible. The July data were a mixed bag. The non-farm payrolls figures were better than expected and the revision to the prior month was better than expected, but the unemployment rate rose. That's why you're seeing the S&P rallying.

"We're on a roller coaster right now but people are afraid of a crash. This report reassures us that the employment situation is bad, but not about to careen out of control and crash. The job market won't get better for a while. Recessions don't tend to be as dramatic because the manufacturing base has gone offshore so you don't get those massive layoffs in manufacturing. The flip side is you're not going to have the dramatic upticks either. These shifts tend to be prolonged."

DAVID WYSS, CHIEF ECONOMIST, STANDARD & POOR'S, NEW YORK:

"It's sort of a mixed bag. The payroll numbers were a little bit better than expected, they were only down 51,000. But on the other hand the unemployment rate shot up to 5.7 percent, which is worse than anticipated.

"We were little surprised last month because the labor force participation rate dropped, and I think what this indicates that was a bit of a fluke, and it came back this time. A lot of the decline last time was in teenagers, and that's the unemployment rate that really shot up this time. That was up 2.2 points. I think that was just a fluke caused probably by seasonal adjustment issues. They couldn't find a job, they dropped out of the labor force...

(Unemployment rate) "It's a high number, we're above the historical average slightly. By itself, the actual level is not that big a deal, but it's up 1.3 points from where it was at the bottom. We've never had that big an increase where it wasn't called a recession.

"My opinion remains the same. We're in a recession. It's going to be a mild recession one but a long one."

MARC PADO, U.S. MARKET STRATEGIST, CANTOR FITZGERALD & CO., SAN FRANCISCO:

"People really thought the non-farm payrolls number was going to be bad number. You're bouncing back in equity futures from the fact that the number wasn't as bad.

"So not only was the latest number 20-25,000 better-than-expected but the prior two months were revised up. So it's not a good number but it's not as bad as expected."

FERGAL SMITH, MANAGING MARKET STRATEGIST, ACTION ECONOMICS, TORONTO:

"We're pretty close to expectations. The market was bracing itself for an ugly number. The dollar rallied on the data because we didn't get a steep decline in payrolls as had been forecasted. For the dollar, it will be technical for the rest of the day. If $1.5518 (for EUR/USD) is broken, we'll probably see further strength in the U.S. dollar."

BRIAN GENDREAU, INVESTMENT STRATEGIST, ING INVESTMENT

MANAGEMENT AMERICAS, NEW YORK:

"This is exactly in line with the weak U.S. economy. While we aren't seeing a loss of 200,000 or 300,000 in layoffs, we never really saw corporations go on a hiring binge either. We are clearly in a growth recession and my fear is that we are in a mild, but longer recession than the one we experienced in 2001-2002. This figure might not be as weak as expected but it is still painful. I don't think this will change anyone's perceptions on slow economic growth."

RICHARD DEKASER, CHIEF ECONOMIST, NATIONAL CITY CORP.,

CLEVELAND:

"On balance, it's a favorable report. It has to be perceived as better than expected because of the payroll number which is not as dire as feared.

"A higher jobless rate is worrisome from a worker perspective. But from the Fed perspective, this should assuage inflation concerns because a higher unemployment rate clamps down upward pressure on compensation."

JIM O'SULLIVAN, ECONOMIST, UBS, STAMFORD, CONNECTICUT:

"Clearly it's a pretty weak labor market. Payrolls are more than weak enough to keep the unemployment rate going up, and there's no sign of a turnaround. For now the Fed is hold, but we still think the next move is down not up. If unemployment keeps going up I think ultimately there'll be pressure for them to ease again."

DAVID RESLER, CHIEF ECONOMIST, NOMURA SECURITIES INTERNATIONAL,

NEW YORK:

"Based on the headlines it is not as discouraging as we thought it would be -- it is the smallest job loss in a few months anyway. Job losses in manufacturing were significant but not as large as I feared they might be. Overall the report looks to be broadly consistent with other data that show the economy quite soft, basically stalled, not growing very much, but not contracting very much either."

GARY THAYER, SENIOR ECONOMIST, WACHOVIA SECURITIES, ST. LOUIS,

MISSOURI:

"The job losses are not dramatic, but they show that the economy is very close to recession and that problems in the labor market are probably going to be a concern to consumers.

"Payroll employment fell for the seventh consecutive month, showing that companies are still trimming their workforce. The unemployment rate rose to 5.7 percent, partly because more people are looking for jobs and it's a difficult job market."

MARKET REACTION: STOCKS: U.S. equity index futures rise BONDS: U.S. Treasuries turn negative DOLLAR: U.S. dollar rises RATE FUTURES: Fed fund futures trim gains, see 30 percent chance of September rate hike, up from 26 percent before data