Employers in July hired the most workers in five months, but an increase in the jobless rate to 8.3 percent muddled the near-term outlook for monetary policy, Reuters reported.

Nonfarm payrolls rose by 163,000 employees last month, the U.S Labor Department said today, beating economists’ expectations in a Reuters poll for a 100,000 gain. That snapped three straight months of job gains below 100,000 and offered hope for the struggling economy.

However, the unemployment rate rose from 8.2 percent in June, even as more people gave up the search for work and a survey of households showed a drop in employment.

The employment report comes two days after the Federal Reserve Board sent a stronger signal that a new round of major support could be on the way if the faltering recovery does not pick up.

“We are not seeing large scale layoffs, so job destruction is pretty limited,” said Scott Brown, chief economist at Raymond James & Associates.

The private sector again accounted for all the job gains, adding 172,000 new positions. Government payrolls dropped by 9,000, as cash-strapped local governments laid off teachers.

Construction employment dipped 1,000, despite a rise in home building. Manufacturing payrolls increased by 25,000, largely because of fewer layoffs in the auto sector as manufacturers kept production lines running during the month.

Within the vast services sector, employment gains were fairly widespread. From retail to professional and business services, employers added workers.

Temporary help services increased 14,100 after rising 21,100 the prior month. But hiring in the utility sector was restrained by a strike at a power firm in New York last month.

Average hourly earnings increased 2 cents last month, suggesting consumer spending will struggle to regain steam after it slowed sharply in the second quarter.
The average workweek was unchanged at 34.5 hours.