WASHINGTON -- The U.S. economy generated jobs last month at the fastest pace since February, a sign it is resilient enough to pull out of a midyear slump and grow modestly even as the rest of the world slows down.
The 163,000 jobs employers added in July ended three months of weak hiring. But the surprising gains weren't enough to drive down the unemployment rate, which ticked up to 8.3 percent last month from 8.2 percent in June -- the 42nd straight month the jobless rate has exceeded 8 percent. The United States remains stuck with the weakest economic recovery since World War II.
The latest job numbers, released Friday by the Labor Department, provided fodder both for President Barack Obama, who highlighted improved hiring in the private sector, and Republican challenger Mitt Romney, who pointed toward higher unemployment.
"It's not especially weak, but it's not especially strong," said Scott Brown, chief economist at the investment firm Raymond James.
Investors focused on the positive. The Dow Jones industrials surged 217 points.
Three more monthly jobs reports will come out before Election Day, including the one for October on Friday, Nov. 2, just four days before Amer icans vote.
No modern president has faced re-election when unemployment was so high.
In remarks at the White House, Obama said the private sector has added 4.5 million jobs in the past 29 months. But he acknowledged there still are too many people out of work. "We've got more work to do on their behalf," he said.
Romney focused on the increase in the unemployment rate, as did other Republicans. "Middle-class Amer icans deserve better, and I believe America can do better," he said in a statement.
The economy is still struggling more than three years after the Great Recession officially ended in June 2009. The collapse of the housing market and the financial crisis that followed froze credit, destroyed trillions of dollars in household wealth and brought home construction to a halt. Consumer spending, which accounts for 70 percent of economic output, remains weak as Americans pay down debts and save more.
From April through June this year, the economy expanded at a listless 1.5 percent annual pace, a slowdown from the January-March pace of 2 percent.
The job market got off to a strong start in 2012. Employers added an average 226,000 a month from January through March.
But the hiring spree was caused partly by an unseasonably warm winter that allowed construction companies and other firms to hire earlier in the year than usual, effectively stealing jobs from the spring. The payback showed up as weak hiring -- an average 73,000 a month -- from April through June.
Then came the 163,000 new jobs in July, beating the 100,000 economists had expected.
Now that the warm weather effects have worn off, economists expect job growth to settle into range of 100,000 to 150,000 a month.
That would be consistent: The economy has added an average of 151,000 jobs a month this year. But that hasn't been enough to bring unemployment down. At 8.3 percent, unemployment was as high in July as it had been in January.
The unemployment rate can rise even when hiring picks up because the government derives the figures from two different surveys.
One is called the payroll survey. It asks mostly large companies and government agencies how many people they employed during the month. This survey produces the number of jobs gained or lost.
The other is the household survey. Government workers ask whether the adults in a household have a job and use the findings to produce the unemployment rate. Last mon th's uptick in joblessness was practically a rounding error: The unemployment rate blipped up from 8.22 percent in June to 8.25 in July.
Worries have intensified that the U.S. economy will fall off a "fiscal cliff" at the end of the year. That's when more than $600 billion in tax increases and spending cuts will kick in unless Congress reaches a budget deal.
The draconian dose of austerity is meant to force Repub licans and Democrats to compromise. If they can't and taxes go up and spending gets slashed, the economy will plunge into recession, contracting at an annual rate of 1.3 percent in the first six months of 2013, according to the Congressional Budget Office.
The rest of the world is slowing. Much of Europe is in recession as policymakers struggle to deal with high government debts, weak banks and the threat that countries will abandon the euro currency and wreck the region's financial system.
European Central Bank President Mario Draghi said Thursday the bank is preparing to buy government bonds to help drive down borrowing costs in debt-ridden countries like Spain and Italy.
The high-powered econ omies of China, India and Brazil are also slowing sharply, partly because Europe's troubles have hurt their exports.
In the United States, the Federal Reserve earlier this week passed up a chance to approve new measures to jolt economic growth but signaled it was ready to act if growth and hiring stayed week. That led many economists to predict the Fed would announce a third round of bond purchases designed to push long-term interest rates down and generate more borrowing and spending in the economy.
If the previous three months of lackluster job creation were not enough to spur the Fed into acting more aggressively, then Friday's numbers "must surely kill off the possibility of imminent action," said Chris Williamson, chief economist at Markit in London.
The job market still has a long way to go. The economy lost 8.8 million jobs from the time employment peaked in January 2008 until it hit bottom in February 2010. Since then, just 4 million, or 46 percent, have been recovered. Never since World War II has the economy been so slow to recover all the jobs lost in a downturn.
Nearly 5.2 million Americans have been out of work for six months or more.