In July, employers picked up hiring, adding 163,000 jobs, after a dismal spring that saw job creation slow to a crawl. The unemployment rate increased to 8.3 percent from 8.2 last month.
The unemployment rate is expected to remain at or above 8 percent by the time the elections roll around in November, a difficult hurdle for President Obama's reelection campaign.
Obama and Republican presidential candidate Mitt Romney are sparring over who is best suited to help the economy.
Meanwhile, the Federal Reserve is weighing the merits of a third round of "quantitative easing" if the economy does not pick up steam, according to minutes released Wednesday.
The Fed must tread carefully in taking any action before the elections or risk being accused of playing politics.
The central bank is responding to slowing job growth as well as sluggish economic growth — the economy expanded at a 1.5 percent rate from April through June, below the pace of the previous two quarters.
Still, there are signs of recovery, especially in the housing market, which has seen sales increases, record-low mortgage rates, improving builder confidence and rising prices. But the market faces a continued lack of credit availability and problems with appraisals.