The U.S. labor market continued its moderate pace of expansion in July, but the widely-scrutinized unemployment rate ticked up by one-tenth of a percentage point, sparking clashes between Democrats and Republicans on the priorities of U.S. economic policies.

MIXED MESSAGE

The U.S. non-farm sector added 163,000 new jobs across the country last month, the best pace of hiring in five months, the Labor Department's establishment survey data collected from private and public sector employers showed on Friday.

U.S. private employers added 172,000 jobs, but did not surpass the threshold of 200,000 deemed by some economists as strong enough to reduce the unemployment rate quickly.

Manufacturing employment continued to expand and manufacturers added 25,000 jobs in July, and retail trade added 6,700 jobs last month. Professional and business services including accounting and legal services added 49,000 jobs. The construction sector shed 1, 000 jobs, and utilities industry employment declined by 8,100.

Government employment declined by 9,000 in July amid spending cuts. Since February 2010, U.S. state and local governments have lost 485,000 jobs, figures from theWhite Houserevealed.

The jobs creation figure was upwardly revised to 87,000 for May from the previous estimate of 77,000, and was downwardly revised to 64,000 for June from the previous reading of 80,000.

However, the household survey data collected by the department showed that the unemployment rate ratcheted up from 8.2 percent in June to 8.3 percent in July, evidence of a still bleak picture of the economic recovery, as the unemployment has stayed above 8 percent since February 2009.

Total unemployed Americans topped 12.8 million in July, nearly the same as in June and still almost double the level prior to the recession. The number of long-term unemployed who have been jobless for at least 27 weeks stood at 5.2 million.

The department uses two sets of surveys,with one establishment survey, or business survey, showing job gains, and the other household survey showing unemployment rate fluctuation. The establishment survey was considered as a more reliable reading of the economic trend.

After the release of the latest jobs report, U.S. stocks rallied on Friday, snapping a four-day losing streak, with the blue-chip Dow Jones industrial average advancing about 1.7 percent on the close.

OPPOSING VIEWS

As U.S. economic recovery has become the major talking point in the election year, the sub-par job report attracted starkly opposing views on the U.S. economic recovery from the White House and Republicans.

The latest report provided further evidence the U.S. economy continued to recover from the worst downturn since the Great Depression, White House Council of Economic Advisers chairman Alan Krueger said Friday in a statement.

The top White House economist stressed that the household survey data showed that the unemployment rate only edged up from 8. 217 percent in June to 8.254 percent in July, or essentially unchanged.

An up-tick of unemployment rate with three month to go before the election day was bad news for any incumbent president. An unemployment rate touching below 8 percent by the election day was a milestone considered as a symbolic victory for U.S. PresidentBarack Obama's economic records.

"It is critical that we continue the policies that build an economy that works for the middle class as we dig our way out of the deep hole that was caused by the severe recession that began in December 2007," said Krueger, adding that Obama has proposed an extension of middle class tax cuts that would prevent the typical middle class family from facing a tax increase in the amount of 2, 200 U.S. dollars next year.

Campaigning in the U.S. state of Nevada, Republican presidential hopefulMitt Romneycharged that the unemployment rate has hovered above 8 percent for 42 consecutive months, the longest period of such lingering high unemployment situation in American history, as Obama's economic policy has failed.

Speaking at the White House at an event flanked by middle-class Americans, Obama stressed that the last thing the nation should do in the weak economic recovery was tax increase on middle class families, adding that "when families have the security of knowing that their taxes won't go up, they're more likely to spend, and more likely to grow the economy."

With his economic records under attack by his Republican foes, Obama was endeavoring to shift the focus of discussions to economic fairness and portray himself as the defender of the middle class families and supporter of popular spending programs including education and transportation.

But with a gridlocked Congress unlikely to pass any substantial fiscal stimulus programs before the election and the Federal Reserve holding fire for further monetary easing measures, Obama was stuck with an economy losing steam.

The Fed predicted in June that the U.S. economy would only grow between 1.9 percent and 2.4 percent this year, weaker than the range of 2.4 percent to 2.9 percent in its April projection. The central bank didn't expect the nation's unemployment rate to fall below 8 percent by the end of this year.