The nation's unemployment rate fell to 7 percent in July, its lowest level in more than a year, the Labor Department reported yesterday.

The unemployment drop, from 7.3 percent in June, came as a surprise to many economists, since other indicators have pointed to a slowdown in the economy.

The unemployment decrease was attributed to a large increase in the number of jobs last month. The Labor Department reported an increase of 570,000 jobs, with more than 100,000 new jobs added in manufacturing.

Janet L. Norwood, commissioner of labor statistics, said the figures show "the first large increase in several months," despite expectations that unemployment would rise as the economy slows.

"It looks like employers are not letting people go," Norwood said. "Either they don't feel the decline or they are waiting to see."

Despite the good numbers in July, administration economists remain cautious, and still expect a rise in the jobless rate between now and the end of the year.

In a published report yesterday, Treasury Secretary Donald T. Reagan suggested that the Federal Reserve loosen its money policy to avoid a deeper recession than the slowdown being forecast by the administration. A spokesman for Regan said yesterday that there has been no change in Treasury Department policy.

Until now, administration officials publicly have urged ypaul A. Volcker, the Federal Reserve board chairman, to keep money tight, even at the cost of high interest rates.

One measure of the money supply, M1-B, which includes cassh in circulation and checking accounts at banks and thrift institutions, has been growing below its target range, and Regan said in the published interview that "if it stays here, you're going to have a severe recession. You've got to come up into the low end of the range."

The continuing high interest rates have been a major factor in slowing the economy. The housing and auto industries, which have been hit hardest by the high cost of borrowing, did not share in the general improvement in jobs last month, the Labor Department report showed.

Construction employment has slumped since April, and dropped a further 20,000 in July. The auto industry "continues to show weakness, and has recovered only a small proportion of the jobs lost during the past two years," Norwood said.

Administration officials had hoped that the enactment of President Reagan's economic program would be welcomed in financial markets, and lead to a drop in interest rates. But the rates have remained stubbornly high. This places further pressure on the administration to find more budget custs.

officials in the Office of Management and Budget say they believe that the large federal deficit is a major factor behind high interest rates and financial market fears of continued inflation. Treasury officials, particularly Beryl Sprinkel, undersecretary for monetary affairs, put more stress on the numbers for the money supply.

Sprinkel says the Federal Reserve should not allow much variation in money growth on either side of the target range, as too much money will lead to inflation, and too little to a drop in real output.

Administration sources yesterday said that Regan's suggestion for a loosening of the money policy probably reflected Sprinkel's view.

Federal Reserve officials have often said that it is difficult to control short-term variations in the money supply, and that too much attention should not be paid to weekly or monthly numbers.

Men, particularly in the 20-to-24 age group, won most of the extra jobs in July, the Labor Department said. The jobless rate for men was 5.6 percent last month, down from 6.1 percent in June; for women 6.7 percent, up from 6.5 percent; for mon-whites 13.6 percent, down from 14.2 percent; for Hispanics 9.9 percent, down from 10.2 percent, and for minority teen-agers 36.4 percent, down from 38.9 percent.

A total of 7.5 million people were unemployed in July, with 99 million employed.

Hourly earnings rose by 0.4 percent in July, the Labor Departement reported. This makes an 8.8 pe3rcent increase over the last 12 months.