Employers added 142,000 jobs in August, up from just 89,000 in July, according to a non-farm payrolls report released by the US Labor Department on Friday.
The unemployment rate ticked down to 4.2 per cent from 4.3 per cent in July, which had been the highest level in nearly three years.
Collectively, Friday's figures depict a job market slowing under the pressure of high interest rates but still growing.
Many employers are responding to the resilience of consumers, who stepped up their spending in July, even after adjusting for inflation.
A survey of service sector companies, including banks, restaurants and healthcare providers, found that their sales and hiring both rose.
The labour market is in an unusual place: jobholders are mostly secure, yet with the pace of hiring having weakened, landing a job has become harder.
In the meantime, inflation is steadily falling back to the Federal Reserve's two per cent target, opening the door for the Fed to cut its key interest rate from a 23-year high.
Friday's report makes it likely that the central bank will announce a quarter-point rate cut when it next meets on September 17-18.
In a speech in August, chair Jerome Powell suggested the Fed's policymakers had all but tamed inflation through high interest rates and did not want to see the job market weaken further.
The central bank is trying to achieve a "soft landing", in which it succeeds in driving inflation down from a 9.1 per cent peak in 2022 to its target level without causing a recession.
Later on Friday, Christopher Waller, a member of the Fed's Board of Governors, is scheduled to discuss the economic outlook in a speech at the University of Notre Dame.
Waller, an influential member of the governing board, might provide insights into the Fed's next moves.
