Jobs report beats forecasts with 163,000 jobs in July

— -- The nation's unemployment rate ticked up from 8.2% to 8.3% as the economy added a surprising 163,000 jobs in July.

U.S. stock index futures rose after the report, and when stock markets opened an hour later, stocks rallied.

The number of payroll jobs beat forecasts that called for about 100,000 new jobs, according to economists surveyed by Bloomberg.

Overall, private employers added 172,000 jobs in July while governments cut 9,000, the Labor Department reported.

Employment rose in professional and business services, food services and drinking places and manufacturing, the government said.

Employment continues to recover slowly from a recession that pushed unemployment to 10% in October 2009.

The change in the unemployment rate was actually miniscule, says Maury Harris, chief U.S. econonomist for UBS. "It went from 8.2% to 8.25%, and they rounded up to 8.3%."

The number of unemployed was 12.8 million in July and the number of long-term unemployed was 5.2 million. Both showed little change from June.

The economy added an average of 225,000 jobs a month in the first quarter, but the gains slowed to fewer than half that number in the second quarter.

A warmer than usual winter pulled some hiring from spring into early 2012, and job creation also has been stunted by the European financial crisis and business anxiety over a series of tax increases and federal spending cuts scheduled to take effect at the end of the year, says Patrick O'Keefe, chief economist at consulting firm J.H. Cohn.

In both 2010 and 2011, the economy began the year briskly and stumbled by mid-year, he said.

This year, the pattern has repeated itself. Gross domestic product growth slipped to a 1.5% annual rate in the second quarter from 4.1% late last year, the Commerce Department reported last week. Consumer spending grew more slowly and government spending fell. Growth may hit 1% in the fourth quarter, according to Bank of America Merrill Lynch.

In recent days, a report on factory orders said the manufacturing sector, which has led the recovery and added a half-million jobs since 2010, is slipping back into contraction. The most recent report on retail sales showed a third straight month of decline as well.

The bad news has been offset by improvements in housing starts, home prices and new unemployment-insurance claims. A stronger housing market may lead the private sector to faster growth next year, Moody's Analytics chief economist Mark Zandi said.