U.S. payrolls added 163,000 jobs in July, a rate that is not nearly strong enough to give the economy the boost analysts are looking for.

Meanwhile, the unemployment rate ticked up from 8.2% in June to 8.3% in July, the Labor Department said.

The jobs picture is bleak, with 12.8 million workers still unemployed, the government said. 

Analysts with Econoday still called the report "a little better than expected," noting that businesses are hiring at a modest pace.

"It was not dramatic but the payroll jobs gain actually improved in July," Econoday said. "However, the unemployment rate headed the wrong way. Payroll jobs in July increased 163,000, following gains of 64,000 in June (originally 80,000) and 87,000 in May (previous estimate of 77,000). The net revisions for May and June were down 6,000. The market consensus was for 100,000."

Doug Duncan, chief economist with Fannie Mae, viewed the report as encouraging, but remains cautiously optimistic.

"If this improvement continues, we would be ahead of where were last year, when the rebound from the spring lull did not arrive until the fall, and this should help balance the risk for the outlook in the second half of the year, which is now tilted to the downside," said Duncan. "However, we remain cautious, with just one month of encouraging news and a downward revision of data in the prior month."

The report comes at a time when the market is dealing with a slew of less than optimistic data. Last week, the government noted that gross domestic product slowed to a growth rate of 1.5% in the second quarter.

While that's the initial GDP growth estimate and subject to change, the figure is well below the 2% growth rate experienced in the first quarter.

Unemployment insurance claims also grew to 365,000 filings for the week ending July 28, which is 8,000 claims higher than a week earlier, the Labor Department said.