In a final Cabinet meeting before his annual August vacation, President George W. Bush on Friday put the best face he could on a mixed unemployment (search) report.

"Even though some of the numbers are good, there are still too many people looking for work, and so we're going to keep working on the economy until people can find a job," Bush said from the White House Cabinet room.

June's jobless figures actually fell two-tenths of a percent. Labor analysts said it is because a half million people gave up looking for work and so reduced the size of the labor pool.

At the same time, America's incomes rose by 0.03 percent and spending increased by the same amount. But it wasn't enough to keep retailers from trimming thousands of positions.

Meanwhile, the manufacturing sector lost 70,000 jobs, its 36th losing month in a row.

Bush said his economic advisers have been touring the country and tell him Americans are positive about the economy. ln fact, one day earlier, the White House welcomed a larger-than-expected rise in the gross domestic product.

In addition, Bush said this year's tax cut — the third of his administration — will soon begin paying dividends.

"Those tax deductions will be reflected in their paychecks soon. Expansion of the child tax credit is helpful to people because checks are now in the mail,"  Bush said.

But Democrats seized on the jobless report. House Minority Leader Nancy Pelosi (search) released as statement saying: "Since President Bush took office, the country has lost 3.2 million jobs — the worst record since President Hoover."

And Rhode Island Sen. Jack Reed (search) voiced his party's hopes when he recalled the recession that cost President George H.W. Bush his re-election.

"We are in the midst of a jobless recovery. The economy is in as much trouble as it was in the early '90s if not more," Reed said.

Actually, Bush said, the recovery would have been stronger if he had been willing to risk a deeper recession.

"A deep recession would have meant more people would have been out of work. We want people to work in America. It's in our country's interest they do so."

As recently as two days before the president signed this year's tax cut bill in May, the White House was predicting it would create a million jobs.

On Friday, White House Press Secretary Scott McClellan was reluctant to repeat that prediction. Instead, he said the past three years' tax cuts have kept jobs from being lost.

They "reduced [the] unemployment rate by nearly 1 percent, increased the number of jobs by as much as 1.5 million because of actions we took," McClellan said.

And the White House is also banking on economists' predictions that the economy, which saw such surprising second-quarter growth could expand even faster in the second half of the year — by 3.5 to 4 percent.

Even with the increase, unemployment figures may not improve. That's because as more jobs become available, more people who've given up looking for work will get back in the job market to compete for them.

Fox News' Wendell Goler contributed to this report.