WASHINGTON - The U.S. July employment report was stronger than expected but overall mixed; it is too soon to determine if this is a turn to a better trend that will take advantage of recent economic patterns that suggest better growth in the fall.

July payrolls printed up 163,000 overall and up 172,000 for private jobs. But the unemployment rate at a 0.1-point rise to 8.3% (really just a fractional 0.04 point higher unrounded) is not confirming the jobs gain. There was nothing very unusual in the 63.7% labor force participation rate or the 58.4% employment-population ratio.

July's payroll composition included: manufacturing up 25,000 (autos were up 13,000 on "fewer seasonal layoffs"), construction down 1,000, retail up 6,700, temporary workers up 14,100, healthcare up 19,100, restaurants up 29,400, utilities down 8,000 due to a strike, and government down 9,000.

Computer design added 7,000 jobs. Government included local education at a 7,000 drop after adjustment but off 1.16 million unadjusted.

Average hourly earnings for all private employees rose 2 cents to $23.52, a pace of 1.7% growth over the year. Hours also rose, suggesting gains in income and production.

Bottom line: this was not a bad report but it's too soon to say if economic strength is back. There was a 1.2 million drop in unadjusted July jobs, mainly in education, but this is one of the more difficult months to adjust properly.

Certainly the July jobs gain compares favorably with the 73,000 Q2 average jump, but it remains below the 225,000 average rise for Q1. That is, July's 163,000 jobs gain is merely a little above the monthly average to date of a 151,000 increase. That is little changed from the average monthly gain of 153,000 in 2011. Both represent slow growth.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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