The unemployment rate, which rose to 7.1 per cent in June, fell back to 6.9 per cent last month, the Department of Labor reported yesterday.
But the decline in the politically sensitive measure was not due to a rise in the number of persons with jobs - in fact employment declined by 118,000 persons - but because of a decline in the size of the labor force.
A spokesman for the Council of Economic Adviser said that while the July data rise in unemployment was as aberration and that the general tread will be downward.
Julius Shiskin, commissioner of labor statisties, called the July performance "relatively lackluster."
Testifying before the congressional Joint Economic Committee Shiskin said the July decline in employment shows that the big improvement in the economy during the first six months of the year "is being followed by a slower rate of growth," an assessment the spokesman for the Council of Economic Advisers concurred in.
Administration, congressional and many private forecasters have said that the 7 per cent growth rate the economy achieved during the first half of the year will slow to about a 5 per cent rate during the last months of 1977.
A slower growth rate - as measured by the so-called real gross national product - means that the economy will not create jobs as fast as it did between January and June, when 2.1 million citizens found employment.
The unemployment rate, which had climbed to 8 per cent last November, fell to 6.9 per cent last May, the first time it had below 7 per cent since late 1974.
The labor force declined by 340,000 persons last month, with nearly all the decline coming among teenagers, according to the Labor Department. In June there was a big increase in teenage job seekers.
Shiskin said the big increase in the labor force in June - which was the reason the unemployment rate shot up - and the decline in July might be technical.
The unemployment rate, based on a monthly survey of 47,000 household, in adjusted so account for regular seasonal ups and downs in employment and unemployment.
June's survey was conducted later in June than in most years, which meant there was a higher number of unemployed youths than normal. Many teenagers who would have been counted in the July survey were counted this year in the June survey.
That upset the seasonal adjustment factors, which adjust for average rises. The factors compensated in July, driving the enemployment rate back to the May level.
Nonetheless, the unemployment rate remains high for the overall labor force and for young people in particular. The rate for all teenagers was 17.4 per cent in July, compared with 18.6 per cent in June, while the rate for black teenagers rose to 40.7 per cent from 39.4 per cent in June.
The unemployment rate for all blacks stayed the same at 13.2 per cent, while the white unemployment rate declined from 6.3 per cent to 6.1 per cent. The rate for adult men rose 5.1 per cent from 5 per cent, while the rate for adult women declined from 7.2 per cent to 6.9 per cent.
Overall, 90.7 million in June. The number of unemployed fell from 6.96 million to 6.74 million.
The unemployment rate is the percentage of the labor force which is unemployed buy actively seeking a job.
The labor force is simply those with jobs and those seeking them. The unemployment rate can rise, as it did in June, even when there are big gains in employment, if there is an even bigger jump in the number of persons seeking work.
Or it can fall, as it did in July, because a large number of persons stop looking for work, lowering the number of unemployed.
The average workweek fell from 36.2 to 36.1 hours for all non-supervisory workers, but average hourly and weekly earnings rose slightly.
The Labor Department also conducts a survey of employer payrolls, which is considered more accurate but less inclusive than the household survey. The number of persons of payrolls registered its ninth consecutive monthly rise, increasing by 255,000 to 82.4 million, the Labor Department reported.