The US unemployment rate fell unexpectedly to 9.4 percent in July as job losses in the month narrowed to 247,000, the Labor Department reported Friday.
   
The much-awaited nonfarm payrolls report was better than expected by private economists, who had forecast a loss of 325,000 jobs and a jobless rate rising to 9.6 percent from the June level of 9.5 percent.

The fall in the jobless rate will be good news for President Barack Obama, who has seen his standing in public opinion polls slip as Americans fret about the weak economy and high unemployment.
 
The report, seen as a key indicator of economic momentum, showed the number of unemployed fell slightly to 14.462 million from 14.729 million in June.
   
The report "confirms that the recession is certainly diminishing in intensity if it hasn't ended already," said Peter Kretzmer, senior economist at Bank of America.
   
"It appears unemployment may have hit its peak. We are starting to see the signs of a turning point but it will take some time for job losses to diminish."
   
Robert Brusca at FAO Economics said the recovery appears at hand.
   
"The jobs turnaround is actually about as rapid as you could hope to see," he said. "The transition from job losses to gains could come as soon as August."
   
The Labor Department revised down the number of job losses for May to 303,000 from 322,000 and for June to 443,000 from 467,000.
   
Since the recession began in December 2007, payroll employment has fallen by 6.7 million, according to the agency.
   
The drop in unemployment even as job losses were rising is the result of two separate surveys, one of individuals and the other, smaller survey of employers. But it also reflects some discouraged workers leaving the labor force.
   
"The unemployment rates and jobs data almost does not add up on the surface," said Jon Ogg at 24/7 Wall Street.
   
"If the data is accurate, then (economic) recovery is likely going to be much sooner."
   
In July, job losses remained widespread but were not as deep as in prior months -- about half the average decline for November through April of 645,000 per month.
   
The goods-producing sector lost 128,000 jobs, including 52,000 in manufacturing. But the agency estimated the auto sector added 28,000 jobs due to recalls from extensive plant shutdowns earlier this year.
   
The services sector shed 119,000 jobs including 44,000 in retail.
   
Sectors adding jobs were education and health care (17,000); leisure and hospitality (9,000); and government (7,000).
   
The average workweek of production and nonsupervisory workers in the private sector, sometimes seen as a proxy for economic activity, edged up by 0.1 hour to 33.1 hours. The manufacturing workweek increased by 0.3 hour to 39.8 hours.
   
On the negative side, the number of unemployed for 27 weeks or more rose by 584,000 over the month to 5.0 million.
   
Last week, the government estimated that the US economy contracted 1.0 percent in the second quarter, better than forecasters had expected.
   
The report showed an easing of the horrific slump and lent credence to predictions that the world's biggest economy was close to emerging from a recession that began in December 2007.
   
That came after a 6.4 percent contraction in the first quarter and a drop of 5.4 percent in the fourth quarter of 2008.
   
Many private and government economists see a return to growth in the second half of the year, although some warn that high unemployment could dampen any recovery.