August 5, 2011 / 1:02 PM / in 6 years

Snap analysis: July payroll data eases recession fears

WASHINGTON (Reuters) - U.S. jobs growth in July picked up substantially in July, a sign the world’s largest economy is gathering some momentum and easing worries a new recession could be brewing.

The U.S. economy generated 117,000 jobs last month -- more than twice the revised rate from June -- and the unemployment rate fell to 9.1 percent.

The report came in stronger than Wall Street expected. Economists had forecast a gain of just 85,000 in non-farm payrolls with the unemployment rate holding steady at 9.2 percent.

However, the dip in the jobless rate reflected more of a contraction in the size of the workforce than an improved employment picture. The total ranks of the employed as measured by the Labor Department’s survey of households slipped by 38,000. But that measure is quite volatile, and markets tend to take their cue from the survey of employers.

The data suggests forecasts for a pick-up in the pace of the recovery are on track and it eases pressure on the U.S. Federal Reserve to take new action to boost growth. Fed policy-makers meet on Tuesday.

Moreover, the slight improvement in the jobs picture will be welcome news in the White House, although President Barack Obama would like to see much more substantial improvement in the economy before standing for re-election in November 2012.

Following are key details from the Labor Department figures:

* The payrolls count for May and June was revised to show 56,000 more jobs added than previously reported.

* Government payrolls dropped 37,000 in July, a ninth straight month of job losses. The drop was mostly due to a government shutdown in Minnesota that left thousands of state workers without paychecks during the survey period for July payrolls.

* Temporary help -- a harbinger of permanent hiring -- rebounded modestly after declining for three straight months.

* The length of the average work week held steady, but a measure of the total work effort edged higher due to the payrolls gain.

Editing by Jan Paschal

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