The Labour Department also said that one reason for the declining number of job losses was because cuts had been so deep leading up to July that there were fewer workers to lay off during the seasonal shutdown that happens in some factories, such as those in the auto industry.

Since the start of 2008, 6.7 million jobs have been lost in the US Several economists said that while the report confirms other economic readings suggesting that the recession may be ending, it's too soon to predict a sharp gain in jobs in the near term.

'The dawn of an economic recovery is here,' said Sung Won Sohn, a professor of economics at Cal State University Channel Islands, as cited by CNNMoney.com.

'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.'

But Robert Brusca of FAO Economics said he believes there is more strength in the job market than many people are willing to acknowledge. He said that the government may even report an overall payroll gain for August next month.

'There is nothing about these numbers that suggest it's a fluke,' he said.

(Arun Kumar can be contacted at arun.kumar@ians.in)