WASHINGTON — U.S. unemployment is stuck at high levels even though some companies are hiring. The problem, government data show, is that too few jobs are being created for the growing number of people looking for work.

Private employers added a net total of 67,000 jobs in August. But the unemployment rate rose to 9.6 per cent from 9.5 per cent, the U.S. Labour Department said Friday, because the number of job-seekers overwhelmed the number of openings.

The unemployment rate has exceeded nine per cent for 16 straight months and is all but sure to extend that streak into next year. If it does, it would break a record of 19 straight months above nine per cent, set from 1982-83, after a severe recession.

Nearly 15 million U.S. workers are unemployed this Labour Day weekend, and the sluggish economy is putting pressure on President Barack Obama and the Democrats ahead of the November midterm elections. Obama said Friday that he intends to unveil a new package of proposals that will likely include tax cuts and spending to spark job growth.

On top of the jobs that companies created last month, both July and June's private-sector job figures were upwardly revised. Overall, the economy lost 54,000 jobs last month as 114,000 temporary census positions ended.

The Labour Department report hardly suggests the economy is out of danger, but the figures were not as bleak as some economists had predicted.

Wall Street embraced the news, and stocks surged within seconds of its release. The Dow Jones industrial average closed up 127 points.

"When the bar is low, it isn't hard to exceed it," said Diane Swonk, an economist at Mesirow Financial. The report "alleviates the sense that the economy is falling off a cliff."

Even with August's gains, job growth has weakened in recent months and isn't enough to keep the unemployment rate from rising. Private employers have added only 78,000 jobs per month, on average, in the past three months. It would take at least 200,000 jobs a month to keep up with population growth and rehire millions of unemployed Americans.

Many economists don't expect that pace of job growth until next year.

The November midterm elections are already shaping up to be a referendum on Democrats' handling of the economy. Many expect the majority party to lose many seats and possibly control of the House and Senate.

Obama called the latest employment figures positive news but acknowledged that much more job creation is needed to help restore the 8.4 million jobs lost during the downturn.

"It reflects the steps we've already taken to break the back of this recession," Obama said. "But it's not nearly good enough."

The president urged Congress to extend the Bush administration's tax cuts only for middle-class Americans and to pass a bill that would increase lending and reduce taxes for small businesses.

Republicans in Congress want to extend the tax cuts for all Americans, including the wealthy. That's a position more rank and file Democrats are beginning to embrace because the economy has not improved fast enough.

There were 14.9 million unemployed Americans last month, the department said. But including people working part-time who would prefer full-time work and those who have given up looking for jobs, 26.2 million people were "underemployed." The underemployment rate rose from 16.5 per cent in July to 16.7 per cent in August.

Persistently high unemployment and a growing economy are not necessarily incompatible, economists said.

Average hourly earnings rose last month. That extra income is likely to help sustain the recovery, said Neil Dutta, an economist at Bank of America-Merrill Lynch. But it could also produce a "two-tiered" workforce, where millions are still jobless but those working see their incomes rise, he said.

After dropping for several months, the workforce grew by more than a half-million people, the Labour Department said. Those out of work are not counted among the unemployed unless they are searching for work.

The fact that more out-of-work people resumed their job searches in August reflected desperation more than it did confidence in the job market, economists said. Many of those who entered the labour force last month were 45 and older, said Sophia Koropeckyj, an economist Moody's Analytics.

They are likely resuming their job searches as their savings are depleted, she said.

When companies have open positions to fill, the demand is high. Kia Motor Manufacturing had about 600 open jobs earlier this year as it moved production of a sport utility vehicle to Georgia from a Hyundai plant in Alabama. The company got more than 44,000 applications by May, when the hiring window closed, said company spokeswoman Corinne Hodges.

But many companies are nervous about expanding as long as the economy looks so weak.