By JEFFREY SPARSHOTT And TOM BARKLEY
WASHINGTON—U.S. employers stepped up hiring in July as the economy continued its uneven recovery heading into this fall's presidential election.
The Employment Report
Why Did Unemployment Rate Increase?
The key reason is because the two numbers come from separate reports: one from a survey of businesses, the other from a survey of households.
U.S. payrolls increased by a seasonally adjusted 163,000 jobs last month, the Labor Department said Friday, but the unemployment rate, obtained by a separate survey of U.S. households, ticked up one-tenth of a percent to 8.3%.
Economists surveyed by Dow Jones Newswires expected a gain of 95,000 in payrolls and an 8.2% jobless rate.
The latest payroll numbers are encouraging after three months of weak job creation, but the figures still aren't enough to lower the unemployment rate, and hiring remains well below the pace set at the start of the year.
Republicans and Democrats are likely to seize on Friday's numbers—they offer the strongest hiring as well as the highest unemployment rate since February.
The campaign of Republican challenger Mitt Romney has repeatedly criticized President Barack Obama's handling of the economy and says that if he is elected his policies will help jump-start the recovery and create jobs.
The president's economic team has defended the administration's record, saying the U.S. is growing though it has been held back by lower government spending, Europe's financial crisis and uncertainty created by political gridlock in Washington.
June and May payroll numbers were revised with only a small net effect—June payrolls rose 64,000 compared with the initially reported 80,000, and May was up 87,000 versus an earlier estimate of 77,000.
Other recent data have pointed to a soft patch—personal spending stalled while factory orders fell in June. Both consumers and businesses appear cautious while the outlook remains unsettled.
Given that the Fed decided not to ease monetary policy this week, central bankers can probably see in the jobs data some vindication for their caution. The Fed will get one more jobs report before its next meeting. Get more real-time analysis and reaction.
Federal Reserve officials, at a meeting this week, held off on any new action to help the economy. But the central bank now appears poised to launch a new round of stimulus should the recovery remain weak.
The Fed said it will "closely monitor" the economy and "will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions."
The Fed's policy makers next meet formally on Sept. 12 and 13. They will have an additional jobs report to scrutinize, as well as other economic data, before deciding whether to launch another major stimulus program.
The Labor Department Friday said private companies accounted for all of the growth in July payrolls, adding 172,000 jobs during the month. Governments, meanwhile, shed 9,000 positions. The federal work force shrank by 2,000.
A Historical View
U.S. unemployment since 1948
In the private sector, professional and business services added 49,000 jobs, led by temporary help and computer systems design.
Manufacturing, a bright spot in an otherwise tepid recovery, added 25,000 jobs. The pace of factory hiring has tailed off markedly since the start of the year.
And the health-care industry added 12,000 positions.
The number of utilities workers dropped by 8,000 bceause of a labor dispute at Consolidated Edison Inc. ED -0.31% last month. ConEd at the start of July dismissed all workers affiliated with a union local, putting 8,500 utility employees out of work. The nearly month-long work stoppage ended last week.
Average earnings edged up by two cents to $23.52 an hour, while the average workweek was unchanged at 34.5 hours.
A broader measure of unemployment—which includes job seekers as well as those in part-time jobs—rose to 15.0% in July from 14.9% the previous month.