WASHINGTON - It's the clearest sign yet the recession is finally ending: Employers laid off far fewer workers in July, the jobless rate dipped for the first time in 15 months and workers' hours and pay edged upward.

Those are the kind of figures that could give Americans the psychological boost necessary for recovery to take root after the worst recession since World War II.

A net total of 247,000 jobs were lost last month, the fewest in a year and a drastic improvement from the 443,000 that vanished in June.

The Labor Department's report Friday showed that the unemployment rate dropped a notch to 9.4 percent in July, from 9.5 percent the previous month. Together with slight increases in the average workweek and wages, the new figures suggested the economy is in a transition from recession to recovery.

"The worst may be behind us," President Barack Obama declared. "Today, we're pointed in the right direction."

Still, the job market remains shaky. A quarter-million lost jobs are a far cry from the employment growth needed to put the national economy on solid footing.

When the economy is healthy, employers need to add a net total of around 125,000 jobs a month just to keep the unemployment rate stable. And to push the jobless rate down to a more normal 5 percent range, it would take much stronger growth - at least 200,000 new jobs a month. Economists say it might take until 2013 to drive down the unemployment rate to 5 percent.

Yet the improvements in July could give some businesses the confidence to hire again - or at least not to lay off more workers. And consumers, less anxious about losing jobs, could respond by spending more freely.

"If people and companies think the worst is behind them - and it probably is - their confidence will be restored," said Richard Yamarone, economist at Argus Research. "That confidence can feed on itself."

On Wall Street, the report propelled stocks higher. The Dow Jones industrial average jumped 114 points, and other stock averages also gained.

Analysts had been forecasting bleaker employment figures: more job losses and an increase in the unemployment rate to 9.6 percent.

The White House said the president still expects the rate to hit 10 percent this year. So do many economists and the Federal Reserve.

Analysts say companies will keep cutting jobs probably through the rest of this year, though the pace of layoffs should continue to taper off. The beginnings of recovery could actually push the unemployment rate higher, since far more people would be energized to look for work again.

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