WASHINGTON (Reuters) - U.S. employers added 110,000 jobs in September and August’s job losses were revised into a gain in a Labor Department report on Friday that lifted some worry about a recession in the near term.

A sign in a shop window advertises available jobs in Arvada, Colorado October 5, 2007. REUTERS/Rick Wilking

But analysts said the data still showed a modest pace of job growth able to support only a less-than-robust economic expansion, which meant the Federal Reserve may be compelled to lower interest rates further to add stimulus to the economy.

“Job gains starting in the spring have not been particularly good,” said economist Joel Naroff of Naroff Economic Advisors Inc. in Holland, Pennsylvania. “They have continued at a pace that is enough to keep the economy out of recession, but not enough to generate strong growth.”

The department said 89,000 jobs were created in August, rather than the 4,000 that it originally reported were lost. It also said 93,000 jobs were created in July instead of 68,000 it previously reported -- a total of 118,000 more jobs in the July-August period than it had earlier estimated.

That averaged out to about 97,000 jobs a month during the third quarter, down from 126,000 in the preceding quarter. The monthly unemployment rate -- compiled from a separate survey -- edged up to 4.7 percent from 4.6 percent in August.

VIBRANT, OR NOT?

U.S. President George W. Bush said the figures signaled “a vibrant economy” but a poll of top Wall Street economists found more than half still think the Fed will trim rates again this month to help the economy get past a housing slump and a surge in mortgage defaults.

The poll showed 10 out of 18 primary dealers -- big firms that deal directly with the Fed -- expect U.S. central bank policy-makers to reduce the benchmark federal funds rate a quarter percentage point at the end of an October 30-31 meeting.

Stocks posted solid gains on prospects for continued growth and higher corporate profits. The Dow Jones industrial average .DJI added 91.70 points to end at 14,066.01 after briefly touching a record high 14,124.54.

The high tech-laden Nasdaq Composite Index .IXIC rose 46.75 points to close at 2,780.32.

But prices for U.S. Treasury securities fell as investors bet the revised jobs report reduced chances for further interest-rate cuts soon. The bellwether 10-year U.S. Treasury note dropped a full point in price as its yield jumped to 4.64 percent from 4.52 percent late on Thursday, and 30-year bonds tumbled 1-19/32 points, pushing their yield up to 4.86 percent from 4.76 percent.

The Fed cut official interest rates by an aggressive half percentage point on September 18, which Fed Vice-Chairman Donald Kohn said on Friday will temper but not totally ward off some softening in future economic activity.

“Our policy action will not be able to avert all of the weakness in the economy that may be in train for the next several months,” he told the Philadelphia Chamber of Commerce.

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The September total for jobs created outside the farm sector was modestly higher than the 100,000 that economists surveyed by Reuters had forecast but it was overshadowed by the big upward revisions in July and August hiring.

The reason cited for the reversal in the department’s August hiring estimate was the government underestimated the hiring of teachers to start a new school year.

STRAINS CONTINUE

The bulk of the gains in September hiring came in service industries, including an addition of 44,000 in education and health services and 37,000 in the government. In the goods-producing sector, 18,000 factory jobs were shed and 14,000 construction jobs were lost.

Some analysts cautioned that even although the labor market showed resilience in the third quarter, the pace of hiring may soften. The U.S. housing sector remains in decline and the consequences of disruptions in financial markets stemming from subprime mortgage problems have not yet been fully felt.

“It shows that in the immediate aftermath of all the turmoil on Wall Street in July and August, Main Street jobs were still growing, particularly in the private sector, at a moderate pace,” said Stuart Hoffman, chief economist at PNC Financial Services Group, Pittsburgh.

“Maybe it does say that the Fed skips the month of October on a rate cut, but there is still evidence here that job growth is not growing like it was,” Hoffman said.