Payrolls declined in July, blurring signs of recovery Firms eliminated 44,000 jobs. Although jobless rolls slipped, that was due only to teens giving up on finding work.

The nation's labor market remained stuck in reverse as companies and other employers shed 44,000 jobs in July, a blow to signs that an economic recovery was under way.

It was the sixth straight monthly decline in payrolls, the Labor Department reported yesterday, and a glaring counterpoint to recent data that painted a strengthening economic picture in the United States.

On the face of it, the news sounded good. Despite the lower payrolls, the nation's unemployment rate fell slightly, from 6.4 percent in June to 6.2 percent in July, the Labor Department said.

But this was a result of teenage workers who couldn't find summer jobs and simply dropped out of the market, and were not counted as job-seekers.

If not for this, the July unemployment rate would have remained at 6.4 percent, said Mark Zandi, chief economist with Economy.com, an economics-consulting firm in West Chester.

Although the economic signals are stronger than they were six months ago, companies that will do the hiring that everyone is waiting for are not ready to take those steps, executives in the Philadelphia region said yesterday.

Ron Naples, chairman and chief executive officer of Quaker Chemical Corp. in Conshohocken, said uneasiness with the lurching nature of the economy has made businesses uncomfortable with making investments and expanding.

"Everybody wants to get out there and stretch their legs and run, but everybody is leery to make the bet," Naples said. "You don't get stars for being too early."

Broad sections of the economy - from manufacturers to retail chains to schools - laid off employees in July. Manufacturers again took the brunt by hemorrhaging 71,000 positions, marking the 36th month in a row of losses.

Underscoring this point was the news last week that Pillowtex Corp., the Kannapolis, N.C., maker of Cannon and Fieldcrest towels and sheets, will close all 16 plants and lay off 6,450 workers. Pillowtex, hurt by low-cost imports, has filed in bankruptcy court for protection from creditors.

Retailers across the United States cut 14,000 jobs in July. On Thursday, Pep Boys - Manny, Moe & Jack, the national auto-parts retailer based in Philadelphia, said it would close 33 stores and reduce personnel in its corporate office as it lays off 860 employees. This includes 100 employees at headquarters on Allegheny Avenue.