U.S. job growth slowed a bit in July and the unemployment rate unexpectedly rose, pointing to slack in the labor market that could give the Federal Reserve room to keep interest rates low for a while.

    Nonfarm payrolls increased 209,000 last month after surging by 298,000 in June, the Labor Department said Friday. Economists had expected a 233,000 job gain.

    Although job growth was below expectations, July marked the sixth straight month employment expanded by more than 200,000, a signal of strength last seen in 1997. In addition, data for May and June was revised to show 15,000 more jobs created than previously reported.

    The one-tenth of a percentage point increase in the unemployment rate to 6.2 percent came as more people entered the labor market, an indication of confidence in job prospects.

    “It’s a goldilocks report for an economy that is steadily expanding but not lifting off. It will reinforce for now the Federal Reserve’s commitment to a gradualist policy approach,” said Mohamed El-Erian, chief economic advisor at Allianz in Newport Beach, California.

    U.S. Treasury debt prices rose as traders trimmed bets the Fed would push rates up in the first half of next year, with the liftoff date predicted by futures contracts moving to July from June. (SD-Agencies)