US employers added 163,000 jobs in July, new figures show, a hopeful sign after three months of sluggish hiring.
However, officials said the unemployment rate rose to 8.3% from 8.2% in June.
July's hiring total was the best since February but the economy has added an average of 151,000 jobs a month this year, roughly the same as last year's pace, which is not enough to satisfy the 12.8 million Americans who are unemployed.
High unemployment could hurt President Barack Obama's re-election hopes. No president since the Second World War has faced re-election with unemployment over 8%.
Investors appeared pleased with the report. Futures tracking the Standard & Poor's 500 index and the Dow Jones industrial average gained about 1%. The stock market is coming off four days of losses. Yields on government bonds also rose after the report came out as investors moved money out of low-risk assets.
A better outlook on hiring could also prompt the Federal Reserve to hold off taking more action to spur growth. The US central bank, which ended a two-day policy meeting on Wednesday, suggested in a statement a growing inclination to take further steps if hiring does not pick up.
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.
Despite July's job 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% in the April-June quarter, down from 2% in the first quarter and 4.1% in the final three months of 2011.
President Obama found hope for the US economy in the new jobs numbers, but Republican challenger Mitt Romney pounced on the slight increase in the unemployment rate, calling it a "hammer blow" to middle-class families. Mr Romney added: "We've now gone 42 consecutive months with the unemployment rate above 8%. Middle-class Americans deserve better, and I believe America can do better."
Mr Obama, speaking at the White House, noted the job growth but added: "We still have too many folks out there who are looking for work."