Associated Press

Oct 7, 3:55 PM EDT

Lured by modest hiring and evidence of higher pay, more people began looking for work in September, a sign of renewed optimism about the U.S. job market

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WASHINGTON (AP) -- Drawn by steady hiring and slightly higher pay, more Americans began looking for work in September, a sign of renewed optimism about the U.S. job market.

The influx of job seekers sent the unemployment rate up slightly as more Americans were counted as unemployed. Taken as a whole, Friday's jobs report from the government painted a picture of a resilient economy that could keep the Federal Reserve on track to raise interest rates in December.

Employers added 156,000 jobs, fewer than the 167,000 in August and well below last year's average monthly gain of 230,000. Still, September's hiring pace, if sustained, would likely be more than enough to absorb new job seekers.

At the same time, the unemployment rate inched up to 5 percent from 4.9 percent as more than 400,000 people began looking for jobs and some didn't immediately find them. The rate has barely budged in the past year even though employers have added 2.4 million jobs. That's because many Americans have begun seeking work after having remained on the sidelines for much of the economic recovery.

"The word has spread that there are jobs to be had, and more and more people are flocking to the job market," said Sung Won Sohn, an economist at California State University's Smith School of Business, said.

The economy's durability, despite its sluggish growth, contrasts sharply with the tumultuous ups and downs of the presidential race, which is nearing its end. The two major presidential nominees have sketched sharply conflicting views of the economy's health and the best ways to accelerate its growth.

Donald Trump focuses on the loss of manufacturing jobs, for which he blames badly negotiated trade agreements. The Republican nominee also points to what he calls excess regulation for stifling businesses and depressing hiring. He pledges to renegotiate or withdraw from the trade pacts and reduce regulation.

Hillary Clinton notes that 15 million jobs have been created since the economy bottomed in 2010. Still, she supports additional infrastructure spending to try to accelerate growth and hiring. And she wants to make college more affordable and community college free.

Friday's jobs report isn't likely to affect the course of the election. But it reflected improvement in two key areas: job-hunting and pay.

For much of the recovery, the proportion of Americans who either had a job or were looking for one had declined as an aging population increased the pace of retirements. Many unemployed people also grew discouraged and stopped looking. Others stayed in school or stayed at home caring for relatives.

All that helped keep the unemployment rate down. People who are out of work aren't counted as unemployed unless they're actively searching for a job.

Yet in the past year, the opposite has occurred: The jobless rate has remained mostly flat even as hiring has been solid. That's because the proportion of adults either working or looking for work has increased from a 40-year low of 62.4 percent in September 2015 to 62.9 percent last month.

That's still far below pre-recession levels. But the proportion has increased even while many people in the vast baby boom generation have been retiring. The workforce - people either with a job or looking for one - has grown 3 million in the past year, the biggest 12-month gain since 2000.

Pay is also ticking up. In September, average hourly pay rose 6 cents to $25.79 and is now 2.6 percent higher than it was a year ago. That's stronger than the pace for most of the seven-year economic recovery, when pay was rising at only about 2 percent a year.

The pay increases suggest that some employers are being forced to pay more to attract workers. Minimum wage increases in many states have also likely contributed to the pay gains.

The influx of job-seekers has likely kept pay gains from rising even further, economists said, because it means employers have more applicants to choose from. That's a major reason Fed Chair Janet Yellen has held off raising rates this year. She wants the job market to continue to draw people off the sidelines. In the meantime, wages and inflation are unlikely to spike.

"The Fed is right to not get too anxious about raising rates," said Michael Dolega, senior economist at TD Bank. "There is more slack in the labor market."

In September, manufacturers shed jobs for a second month, cutting 13,000. Factories have struggled as businesses have reduced their spending on machinery and other equipment. That's provided fodder for Trump, who has focused his economic proposals on restoring manufacturing jobs.

Yet many high-paying services jobs, in sectors such as consulting, accounting and management, grew rapidly last month.

Accounting and consulting firm EY plans to hire 15,000 in the year ending next June, though some of those hires will replace existing staff. The company, formerly known as Ernst & Young, has 45,000 U.S. employees.

It's seeking software developers and data analysts, in addition to accountants and business consultants. And it's offering more family leave and a student loan repayment program to attract new hires.

"As the economy gets better, attracting the best talent is more difficult," says Dan Black, the company's head of recruiting for the Americas.

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