As I have been pointing out for many years, the Labor Department’s monthly jobs report has the record for coming in with a surprise in one direction or the other more often than any other economic report, and therefore produces more immediate triple-digit moves by the Dow in one direction or the other in reaction.

It happened again on Friday. Wall Street, and therefore the media, jumped on Friday’s surprise report that only 247,000 more jobs were lost in July, which was better than Wednesday’s ADP report of a loss of 371,000, and better than economists’ forecasts that 275,000 jobs would be lost.

The market immediately took off to the upside, the Dow in a big triple-digit spike-up.

There are a couple of problems with the exuberance over the numbers.

The first is that the rest of the history of the report is that the market’s initial reaction usually only lasts a day or two, and then reverses over the next one or two days.

The second is that, while it was an encouraging report that only 247,000 more people lost their jobs in July, the exuberance is more related to some easing of the severe pain we’ve become used to, of 400,000 and 600,000 monthly job losses, than it is to being evidence of a recovering economy.

For instance, let’s go back to the beginning of the recession, December, 2007.

On January 4, 2008, the Dow plunged triple-digits, 257 points, in reaction to the jobs report that only 18,000 new jobs had been created the previous month, and the unemployment rate had risen to 4.8% from 4.7%. Analysts had forecast a weak report, that only 70,000 new jobs would be created. But only 18,000 new jobs, when it takes 100,000 new jobs a month just to keep up with the growing population? That was horrible, and the market reacted in kind.

Now, after becoming used to 400,000 and 600,000 jobs being lost monthly as the recession worsened, a further loss of ‘only’ 247,000 jobs is a positive, a sign that everything is close to great again?

However, employment is a lagging indicator and not the place to look for evidence the recession is ending anyway. Employment won’t bottom and turn positive until well after the economy has recovered and businesses need to begin hiring again to keep up with renewed demand.

In my daily blog on August 1, I said the recession has probably bottomed – temporarily. I cited as evidence that GDP had declined only 1% in the second quarter; that home sales and housing starts had been up for two or three straight months (although still at extremely low levels); that the ISM Mfg Index rose to 48.9 in July, still under 50, but only fractionally (any number under 50 indicates that manufacturing is still slowing); and U.S. Construction Spending had increased for the second month in a row.

Meanwhile, businesses slashed their inventories at a record pace in the first half of the year, in an effort to bring them down to match the sharp declines in their sales. With shelves on the bare side I said they are likely to rebuild inventories modestly this quarter in anticipation of a pick-up in back-to-school and holiday-driven consumer spending. And since inventory cut-backs had affected GDP negatively in the first half, any degree of inventory replenishment would be enough to pop GDP into positive territory for this quarter.

However, while that would be encouraging, inventory replacement alone will not produce a sustained recovery, but only a one quarter blip up, particularly if anticipated consumer spending does not show up. A sustained recovery would require that the replenished inventory move off the shelves and continue to do so month after month, quarter after quarter, at a quickening pace.

I said that would be problematic given the already record level of consumer debt, continuing scary job losses, banks tightening rather than loosening lending standards, etc., which has had consumer confidence and retail sales declining further as recently as July.

Nothing I’ve seen in the last week has disabused me of that notion.

Among this week’s economic reports, Consumer Income adjusted for inflation declined 1.8% in June, its biggest decline in four years. Auto sales were down sharply again in July (with the exception of a 2.6% increase in Ford’s sales). The ISM Non-Mfg (service sector) Index unexpectedly declined again in July. The ADP employment report was that 371,000 more jobs were lost in July.

Also, keeping in mind that July was the first month of this quarter in which the economy is supposed to begin recovering, and in which businesses will be encouraged enough about the prospects for a pick-up in consumer spending to begin building their inventories again, most retailers reported this week that their same-store sales continued to decline in July. Among them J.C. Penney reported its sales were down 12.3%; Saks down 16.3%; Target down 6.5%; BJs Wholesale Clubs down 9.1%; Nordstroms down 6.9%; Dillards down 12%; Macy’s down 10.7%, Abercrombie & Fitch down 28%, Gap Stores down 8%, American Eagle down 11%.

So, although I still expect inventory build will give us one quarter of positive GDP, I expect thereafter it’s going to be an ongoing struggle for the economy into next year that will create considerable volatility in markets. By the way, that would not be unusual. According to Forbes columnist Gary Schilling, in eight of the last 11 recessions real GDP was positive for at least one quarter, then fell back again before the recession finally ended.