The US economy added an extra 163,000 jobs in July, according to official figures, beating analysts' forecasts.
However, the unemployment rate rose from 8.2% to 8.3% last month, as more people re-entered the workforce but failed to find a job.
The US Department of Labor also said 6,000 fewer jobs were created in May and June than first estimated.
The US economy has to generate 100,000 new jobs a month just to stand still, according to the Federal Reserve.
The total number of unemployed people was 12.8 million last month, unchanged from June.
Private sector firms hired an extra 172,000 staff, which more than offset the 9,000 fall in government payrolls.
The figures were better than most economists had forecast.
"We are not seeing large-scale layoffs, so job destruction is pretty limited," said Scott Brown, chief economist at Raymond James & Associates.
There were also signs that Americans were optimistic about finding a job. The number of discouraged workers - people not looking for work because they believe there are no jobs - fell 267,000 to 852,000.
The number of involuntary part-time workers, those whose hours have been cut back or who could not find full-time jobs, was unchanged at 8.2 million.
Candidates for the November presidential election have been watching the jobs reports closely, as the economy remains a top voter concern.
President Barack Obama said: "Let's acknowledge, we've still got too many folks out of work. We've got more work to do on their behalf."
The White House's chair of economic advisers, Alan Krueger, said: "Any increase in the unemployment rate is unwelcome but we do see an economy that is continuing to add jobs."
He added that the private sector had added jobs for 29 months in a row, for a total of 4.5 million.
But Republican presidential candidate Mitt Romney described the slight increase in US unemployment to 8.3% from 8.2% last month as "a hammer blow to struggling middle-class families", as he said his jobs plan would add 12 million new jobs by the end of his first term.
"You know this," Mr Romney said. "These numbers are not just statistics. These are real people, really suffering, having a hard time."
Mr Romney went on to criticise the president's policies, saying "This is an extraordinary record of failure."
Last week, official data showed the US economy grew at an annual rate of 1.5% in the second three months of the year, that was slower than the 2% pace at the start of 2012.
On Wednesday, the Federal Reserve said its programme to reduce long-term borrowing costs for firms and households would continue for the rest of the year.
Under Operation Twist, the Fed buys long-term bonds from retail lenders and swaps them for shorter-term bonds.
But it disappointed some investors by not announcing any fresh measures to stimulate economic growth.
The Fed has kept base interest rates at close to zero for nearly four years and pumped $2.3bn into the economy.
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