The employment situation report said 163,000 jobs were added to the economy in the month, better than the 100,000 expected.
The department said the jobless rate was "essentially unchanged," as it crept from 8.2 percent to 8.3 percent, a figure bound to plague the Obama administration this election year. The increase was because more job seekers entered the work force.
"This morning, we learned that our businesses created 172,000 new jobs in the month of July. That means that we've now created 4.5 million new jobs over the last 29 months and 1.1 million new jobs so far this year," U.S. President Barack Obama said. "But let's acknowledge, we've still got too many folks out there who are looking for work."
Obama said more must be done "not only to reclaim all the jobs that were lost during the recession but also to reclaim the kind of financial security that too many Americans have felt was slipping away from them for too long."
While the economic recovery would take time, Obama said, "We also knew that if we were persistent, if we kept at it and kept working, that we'd gradually get to where we need to be."
The report also indicates "growth remains slow in the third quarter -- likely in the range of 2.5 percent," economics Professor Peter Morici at the University of Maryland said in a statement.
Markit economist Chris Williamson said the report, along with drops in retail sales and factory orders in the second quarter, "plus the lowest manufacturing purchasing managers index for three years in July, suggest that the U.S. economy has lost considerable growth momentum so far this summer."
Presumptive Republican presidential nominee Mitt Romney called the uptick a "hammer blow to struggling middle-class families."
"President Obama doesn't have a plan and he believes the private sector is 'doing fine.' Obviously, that is not the case," Romney said in a statement.
The Labor Department indicated growth was steady. This year, "employment growth has averaged 151,000 per month, about the same as the average gain of 153,000 in 2011," the situation report said.
The government said professional and business service jobs increased 49,000 in the month, while computer systems design jobs gained 7,000.
Restaurants and bars added 29,000 jobs in July -- adding to a gain of 292,000 over the past 12 months.
Healthcare added 12,000 jobs, while manufacturing added 25,000.
"Within durable goods, the motor vehicles and parts industry had fewer seasonal layoffs than is typical for July, contributing to a seasonally adjusted employment increase of 13,000," the report said.
The average workweek was unchanged in the month, holding at 34.5 hours. Hourly earnings, on average, gained 2 cents to $23.52.
May's gain in jobs was revised higher, from 77,000 to 87,000, the figure for June was lowered from 80,000 to 64,000.