The pace of US jobs growth picked up modestly last month while unemployment fell, handing US President George W. Bush a potential boost ahead of the presidential election on Nov. 2.
The US labor department said on Friday non-farm payrolls -- among the most watched of US economic indicators -- rose by 144,000, about in line with economists' forecasts.
Figures for the previous two months were revised up, from 32,000 to 73,000 for July and to 96,000 from 78,000 in June.
The unemployment rate fell to 5.4 percent from 5.5 percent in July, the lowest figure in almost three years.
The economy has been an important election battleground with Bush facing the prospect of becoming the first president since Herbert Hoover to preside over a net loss of jobs in a four-year term. He shrugged that off on Friday, saying the economy was "strong and getting stronger."
Treasury Secretary John Snow added: "The American economy continues to move in the right direction, expanding and growing and creating more good jobs. We are not satisfied but, boy, to see that unemployment rate march down is gratifying."
Economists said the improvement meant another rate rise from the Federal Reserve this month was almost inevitable.
The rate, at 1.5 percent, has been raised twice in the past three months.
"These data suggest that the economy is close to a self-sustaining expansion and that means the Fed probably can continue to raise rates," said economist Gary Thayer of AG Edwards and Sons.
Economists cautioned that the improvement was modest and did not suggest that the recent sluggishness in the US economy was over. The figures were followed by a service sector report from the Institute of Supply Management showing a fall in the pace of activity to an eight-month low. The ISM manufacturing survey this week also disappointed.
Paul Ashworth of consultancy Capital Economics said: "There is nothing in either of this week's ISM reports to suggest that payrolls will post bigger gains in the coming months than the 144,000 we saw in August, which is barely enough to keep pace with average labor force growth."
The dollar rose sharply on Friday following the labor department's announcement. The gains, though steep, weren't enough to jar currencies from their recent ranges.
The fact that Friday's number wasn't a shock after several months of dismal payroll surprises also encouraged dollar strength, traders said.
"This report tells us that we're going to get [Fed Chairman Alan] Greenspan's policy of measured tightening for the foreseeable future," said David Durrant, chief currency strategist at Bank Julius Baer in New York.
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