Employers added 117,000 jobs last month, the Labor Department said Friday. That's better than the past two months, which were also revised higher.
The mild improvement may ease investors' concerns after the Dow Jones industrial average plummeted more than 500 points over concerns that the U.S. may be entering another recession.
Businesses added 154,000 jobs across many industries. Governments cut 37,000 jobs last month. Still, 23,000 of those losses were almost entirely because of the shutdown of Minnesota's state government.
Still, the economy needs twice as many net jobs per month to rapidly reduce unemployment. The rate has topped 9 percent in every month except two since the recession officially ended in June 2009.
The unemployment rate fell partly because some unemployed workers stopped looking for work. That means they are no longer counted as unemployed.
The report follows a string of gloomy data that shows the economy has weakened.
The economy expanded at a meager 0.8 percent annual rate in the first six months of this year, the slowest pace since the recession officially ended. Manufacturers are barely growing. Service companies are growing at the weakest pace in a year and a half. Consumers cut spending in June for the first time in 20 months, and they saved more.
High gas prices and scant wage increases have squeezed U.S. consumers this year. And consumer spending accounts for 70 percent of economic activity.
Businesses have responded by cutting hiring after a strong start in which they added an average of 215,000 jobs a month from February through April.
But the government revised the previous two months' totals to show hiring wasn't as weak as first estimated.
The economy added 53,000 in May, up from an earlier estimate of 25,000, and 46,000 in June, up from 18,000. June's total was still the weakest in nine months.
Hiring in July was broad-based. Manufacturers added 24,000 jobs in July, as auto companies laid off fewer workers in July than usual. Retailers hired a net total of 26,000 employees. Employment in health care grew 31,000. Hotels and restaurants added 17,000.