U.S. employers added 163,000 jobs in July, a hopeful sign after three months of sluggish hiring.
The Labor Department said Friday that the unemployment rate rose to 8.3 percent from 8.2 percent in June.
July's hiring was the best since February. Still, the economy has added an average of 151,000 jobs a month this year - enough to keep up with population growth but not enough to drive down the unemployment rate.
"After a string of disappointing economic reports ... we'll certainly take it," said James Marple, senior economist at TD Economics.
Jobs Report Presents Mixed Blessing for Obama
President Barack Obama got new figures Friday to buttress his argument that he's presiding over steady, if slow, economic growth. But the government's report that the overall rate of unemployment actually crept up to 8.3 percent allows Republican rival Mitt Romney to keep pressure on Obama to defend his record.
The new unemployment numbers showed that private employers added 163,000 jobs in July, the best pace of hiring in five months. The jobless rate rose, however, to 8.3 percent from 8.2. percent in June. And Romney jumped on it, calling the figures a "hammer blow" to middle-class families.
No U.S. president since World War II has faced re-election with unemployment over 8 percent.
Obama was expected to comment on the new jobs numbers later Friday morning at a White House event on middle class tax cuts.
Romney released a statement shortly after the Bureau of Labor Statistics announced the new figures for July. READ IT HERE
The candidates sparred from afar on the economy Thursday. Romney, campaigning in Colorado, said his economic program would create 12 million jobs in the next four years. Obama told voters in Florida that his rival favors "trickle-down tax cut fairy dust" that has failed to fix the economy in the past.
Romney's plan for job growth included several broad ideas but few specifics. He said he would help small business owners, cut spending to reduce the deficit and cut taxes.
Obama sought this week to draw a contrast with Romney on taxes, saying the Republican's call for extending cuts for upper-income earners would mean higher tax bills for the middle class. The president's new television ad made the case with a highly personalized message: Romney has paid a lower proportion of his income in taxes than many people of lesser means.
Obama planned to hammer his tax message again on Friday by calling on Congress to extend tax cuts for families making less than $250,000 a year before those cuts expire at the end of the year. The president wants to end the tax cuts, first enacted under President George W. Bush, for families making more than $250,000.
While the overall race for the White House remains deadlocked, several polls show Romney with an advantage over Obama on economic issues. A USA Today/Gallup Poll conducted in late July found 50 percent of Americans said Romney is the candidate who would be better at job creation, with 44 percent siding with Obama.
Economists set modest expectations for Friday's jobs report. The trajectory of late hasn't given the Obama White House anything to celebrate.
The American economy grew at a listless 1.5 percent annual pace from April through June, even slower than the 2 percent rate in the first three months of the year.The slide comes after the optimism of early 2012, when the first three months of job growth averaged more than 225,000 a month.
The government uses two surveys to measure employment. A survey of businesses showed job gains. The unemployment rate comes from a survey of households and is calculated by dividing the number of unemployed people by the size of the labor force. In July, more people said they were unemployed, while the size of the labor force shrank even more.
Economists say the business survey is more reliable.
Investors appeared pleased with the report. Futures tracking the Standard & Poor's 500 index and the Dow Jones industrial average gained about 1 percent. The stock market is coming off four days of losses. Yields on government bonds also rose as investors moved money out of low-risk assets.
Stronger job creation could help President Barack Obama's re-election hopes. Still, the unemployment rate has been above 8 percent since his first month in office - the longest stretch on record. No president since World War II has faced re-election with unemployment over 8 percent.
A better outlook on hiring could make the Federal Reserve reluctant to take more action to spur growth. The Fed, which ended a two-day policy meeting Wednesday, signaled in a statement a growing inclination to take further steps if hiring doesn't pick up.
But some economists say the job gains need to be greater.
Paul Ashworth, senior U.S. economist for Capital Economics, said July's job gains were a "vast improvement" over the past four months. Still, they were well below the average 252,000 jobs a month added from December through February.
"It also isn't strong enough to drive the unemployment rate lower, which is what the Fed really wants to see. So, on balance, we doubt this would be enough to persuade the Fed to hold fire in September," Ashworth said.
The job gains were broad-based. Manufacturing added 25,000 jobs, the most since March. Restaurants and bars added 29,000. Retailers hired 7,000 more workers. Education and health services gained 38,000. Governments cut 9,000 positions.
Average hourly wages also increased by 2 cents. Over the past year wages have increased 1.7 percent - matching the rate of inflation.
Despite July's gains, the economy remains weak more than three years after economists declared the recession had ended in June 2009. Growth slowed to an annual rate of 1.5 percent in the April-June quarter, down from 2 percent in the first quarter and 4.1 percent in the final three months of 2011.
Manufacturing activity shrank for the second straight month in July, a private survey said Wednesday. Consumer confidence improved slightly last month but remains weak.
Rising pessimism about the future is taking a toll on businesses and consumers, many economists say. Europe's financial crisis has weakened that region's economy, hurting U.S. exports. Worries have also intensified that the U.S. economy will fall off a "fiscal cliff" at the end of the year. That's when tax increases and deep spending cuts will take effect unless Congress reaches a budget deal. A recession could follow, Fed Chairman Ben Bernanke has warned.
Americans are responding by spending less and saving more. A big reason growth slowed in the second quarter was that consumer spending, which accounts for roughly 70 percent of economic activity, slowed to an annual growth rate of 1.5 percent. That was down from 2.4 percent in the first quarter.
Romney released a statement shortly after the Labor Department announced the jobless rate.
Romney says Americans deserve better than an unemployment rate that has been above 8 percent for more than three years. He says President Barack Obama doesn't have a plan to boost economic growth.Romney says his economic plan would create 12 million new jobs by the end of his term in office.