It may not have been a blockbuster but the employment report from the BLS has to be viewed in a uniformly positive light. Most of the indicators were moving in a positive direction but we’re still talking second derivative moves here. Things are getting worse at a slower rate.

In July, 247,000 jobs were lost when most analysts had been looking for a fall of around 325,000. The May figure for lost jobs was revised downward to 303,000 from 322,000 and the June figure adjusted to 443,000 from the initial 467,000. All positive trends.

The unemployment rate fell unexpectedly to 9.4% from 9.5%. Almost nobody sees anything in this other than a statistical quirk. The number of individuals looking for work fell thus dragging down the percentage number slightly.

Two good developments were an increase in hourly earnings were up 0.2% and the work week increased from 33.0 hours to 33.1 hours.

The big negative that I picked up from the report was the concentration of job growth in healthcare, education and government. By and large, the larger economy did not fare as well as the numbers might suggest. Essentially, the sectors of the economy that rely to a large extent on government spending were the sectors that show improvement. Not a good omen.

From the Wall Street Journal Real Time Economics blog, here are some economists views:

• July’s Employment Report is the gift that keeps on giving. Nearly every element of it is positive. Most notably, non-farm payrolls fell by a more modest 247,000 last month, the smallest decline since August 2008. Admittedly, a decline in employment of that magnitude still seems hard to square with the growing speculation that the recession ended around mid-year. Looking back, however, the economy lost 265,000 jobs in the first month of the recovery in 2001 and 226,000 jobs in the first month of the recovery in 1991. –Paul Ashworth, Capital Economics
• There is one disturbing trend evident from the household survey… Long-term unemployment is becoming an increasingly pressing issue. The number of those unemployed for 27 weeks or more rose to 4.965 million in July, up from 4.381 million in June. This is easily the highest number on record and, for those who would insist this is meaningless given growth in the labor force over time, it represents 3.21% of the civilian labor force, which is the highest share on record. As of July, 53.5% of the unemployed are so because they have lost their jobs permanently, the highest figure in the life of the data, while 11.4% are on temporary layoff. This is one sign that the current recession has generated a considerable degree of structural, as opposed to cyclical, unemployment, reflecting the amount of excess capacity that had developed in the economy over recent years in areas such as construction, financial services, retail trade, and auto production/sales. Even as the economy recovers, these displaced workers will likely be unemployed for a prolonged period. –Richard F. Moody, Forward Capital
• Today’s news on employment was far better than expected but a mix that portrays near term optimism that the economy is turning the corner but some indications that the loss in earnings power will be weighing on growth for some time to come. The better numbers reflect hiring by the auto industry and Federal government and a sharp slowdown in the reduction of jobs by temporary employment services. But people aren’t spending and the retail industry continues to lose jobs at an accelerating pace, in particular general merchandise stores. –Steven Blitz, Pangea Market Advisory
• This was unambiguously a good report, considering the circumstances, and it was far better than what the market was expecting. More importantly, with the fall-off in the pace of job losses appearing to be gaining some traction and the improved tone of other economic reports, it appears that the U.S recession may well be in its last throes.r –Millan L. B. Mulraine, TD Securities
• While on the face of it this report was “good” news, we are more than a bit suspicious of the result given the preponderance of evidence that points to worse conditions. However, whether or not today’s report overstated the case, the improving trend of the labor market after the autumn/winter carnage cannot be denied. What is still very much open to question is how fast the move will be to stabilization of payrolls and eventually to job growth. We continue to believe that the process will be a slow one, and that households will be contending with weak income growth and balance sheet issues for some time. –Joshua Shapiro, MFR Inc.
• Estimates of employment for the two previous months were revised up by a net 43,000. The direction of revisions has proven in the past to be a reinforcing indicator of changing job market conditions. Consequently., the revisions reinforce hopes that the smaller July job loss is signaling a genuine improvement in labor market conditions. The jobs data augment a growing collection of data suggesting that the US economy is emerging from recession. –Nomura Global Economics
• The case that the recession ended in June continues to grow with this report. The rate of job loss has downshifted and the lengthening of the workweek in July resulted in flat hours worked in the private sector and an increase in manufacturing hours worked, which in turn points to a gain in industrial production in July. However, the decline in the unemployment rate was not a product of job creation, but a result of falling labor force participation. The labor force is unchanged over the last year and, as the economy improves, people are likely to seek jobs, resulting in an increase in the unemployment rate. We do not think that the unemployment rate has peaked — although the case that it can peak at around 10% (rather than 11% or higher) is now much stronger. –RDQ Economics
• Key question now is whether this can last; answer is yes if jobless claims can remain close to the 550,000 reported yesterday; indeed payroll losses could slow to only 150,000 in the next couple of months. What likely can’t last, though, is the unexpected drop in the unemployment rate, which was due entirely to a 422,000 drop in the labor force… Assuming more normal trends over the next few months, the unemployment rate has further to rise. That will intensify the squeeze on earnings… In short, then, we think only the payroll element of this report is sustainable, and it is very welcome. But the final peak in unemployment is not here yet, and wages are still under pressure. –Ian Shepherdson, High Frequency Economics
• The dawn of an economic recovery is here. The sharp contraction in employment has moderated pointing to the end of the recession. The better average workweek and hourly earnings point to the same conclusion. The employment picture improved in almost every major sector of the economy. The economy is in the process of bottoming, but the job market will lag behind. Businesses, which engaged in preemptive layoffs earlier, are not about to start hiring people. Expecting sluggish recovery in demand in the foreseeable future, employers want to make sure that a sustained economic recovery is here before hiring. –Sung Won Sohn, Smith School of Business and Economics
• There’s somewhat less improvement beneath the headline. Employment in motor vehicle and parts manufacturing rose by 28,000, as seasonal adjustment factors looked for layoffs that took place earlier in the year –Alan Levenson, T. Rowe Price
• The lagging employment indicatorsare showing a more pronounced turn, reducing chances of a “W” recovery or deflation. –Stephen Gallagher, Societe Generale
• It’s worth noting that the slippage in the overall unemployment rate was NOT attributable to a gyration in the teenage unemployment rate — which can often be quite volatile during the summer months. The unemployment rate for teenagers slipped 0.2 percentage points which more or less matched the move in the unemployment rate for adults. –David Greenlaw, Morgan Stanley