US job growth accelerated more than expected in July as private employers stepped up hiring, a development that could ease fears the economy was sliding into a fresh recession.
US payrolls increased 117,000, the Labour Department said on Friday, above market expectations for an 85,000 gain.
The unemployment rate dipped to 9.1 per cent from 9.2 per cent in June, but this was mostly the result of people leaving the labour force.
The payrolls count for May and June was revised to show 56,000 more jobs added than previously reported
The report was the first encouraging piece of economic data in some time.
Fears that US economy might be sliding back into recession, coupled with Europe's inability to tame its spreading debt crisis have roiled global financial markets. Economists see the odds of a recession as high as 40 percent.
U.S. stocks on Thursday suffered their worst sell-off in two years.
Top policymakers at the Federal Reserve will sift through the report when they meet on Tuesday but are not expected to announce any new measures to support the sputtering recovery.