Employment grew more than expected in September and job gains for the prior months were revised higher, according to a government report on Friday that could ease fears the economy was heading into recession.
Nonfarm payrolls rose 103,000 the Labor Department said on Friday, while the unemployment rate held steady at 9.1 percent as an increase in household employment offset a rise in the participation rate.
Part of September's relative strength reflected the return of 45,000 Verizon Communications workers who had dropped off payrolls in August due to a strike. Excluding those workers, payrolls increased by 58,000.
The tenor of the report was strengthened by revisions that showed 99,000 more jobs added in July and August than initially reported. In addition, hourly earnings rebounded and the average work week rose.
Economists had expected nonfarm employment to increase 60,000 last month and the jobless rate to hold steady at 9.1 percent.
The government's closely followed employment report was another sign that the world's largest economy was likely to skirt a recession despite weakness over the summer.
Private employment increased 137,000 last month, an acceleration from August's meager 42,000 count. But government payrolls fell 34,000 as employment at the local government level fell 35,000 and the Postal Service shed 5,000 positions.
The nation's weak labor market has posed a critical challenge for President Barack Obama, who is gearing up for a tough reelection battle in November 2012. Obama on Thursday used a news conference to press for measures to spur jobs growth that face uncertain prospects in Congress.
Recent reports on manufacturing, business spending and auto sales suggest the economy fared better in the third quarter after growing at an anemic 1.3 percent annual pace in the April-June period.
But some economists are warning Europe's debt crisis threatens to all but derail the U.S. recovery.
And while third-quarter growth is expected to top a 2 percent annualized pace, that is still too slow to make a dent in the high unemployment rate.
The economy needs to grow by at least a 2.5 percent rate, with payrolls expanding by 150,000 positions a month, to keep the jobless rate from rising.
JOBS ELUDE RECOVERY
The U.S. central bank last month announced new steps to stimulate the economy by pushing long-term borrowing costs even lower by shifting assets on its balance sheet.
Uncertainty over the economic outlook, which continues to be muddied by acrimony in Washington over budget policy and by Europe's inability to get to grips with its debt crisis, is making businesses reluctant to hire.
There were a few bright spots in the payrolls report. Hourly earnings rose four cents after falling four cents in August.
An improvement in income is crucial for consumer spending, which accounts for about 70 percent of U.S. economic activity.
Incomes dropped in August for the first time since October 2009, curbing spending and pushing savings to the lowest level in more than 1-1/2 years.
Manufacturing shed 13,000 jobs last month, extending August's decline of 4,000. Health care added 40,800 jobs. The sector has consistently added jobs as the baby boomers demand more health care services.
Temporary help increased 19.400, slightly less than the previous month's gain.
(Reporting by Lucia Mutikani, Editing by Andrea Ricci)