U.S job growth rebounded in August after two disappointing months, as nonfarm payrolls climbed by 144,000, the Labor Department said Friday. The report makes a September rate hike a virtual lock, economists said.

The unemployment rate fell by one-tenth of a percentage point to 5.4%, the lowest rate since October 2001, primarily because 152,000 adults dropped out of the labor force.

Payroll additions in June and July were revised higher by a cumulative 59,000. July’s gain was revised from 32,000 to 73,000. Economists had been expecting job growth of about 158,000, close to the 177,000 average for the first seven months of the year. Since August 2003, the economy has created 1.7 million jobs after losing about 2.7 million during the recession and painful recovery. The unemployment rate has fallen from 6% to 5.4%.

The August employment report is the last before the Federal Open Market Committee meets Sept. 21 to consider another interest-rate hike.

“This keeps the Fed in play for a 25 bp rate hike on September,” said BMO Nesbitt Burns Inc. chief economist Sherry Cooper. She said Friday’s report suggests the U.S. economy is growing out of its recent “soft patch”. “The renewed job/income growth should help invigorate consumer spending, which had been languishing,” she said in a report.

Carl Gomez, economist with RBC Financial group, agreed the payroll figures are good news for the market “and will definitely calm fears that the U.S. economy would be unable to find its way out of its current ‘soft patch’.”

“Indeed, the U.S. dollar has rallied following the August payroll data while bond yields are up across the curve. And short of any near term surprises, today’s payroll numbers also clearly seals the fate of a September rate hike by the Fed.”

It’s the next-to-last jobs report before the Nov. 2 presidential election, in which voters will choose between two plans for economic growth and national security.

Another report Friday suggested a less-upbeat outlook for the U.S. economy. The Institute for Supply Management reported that activity in the service sectors of the U.S. softened in August.

The ISM’s nonmanufacturing index fell to 58.2% from 64.8% in July, indicating a slower pace of expansion. Read full survey. The decline was larger than expected. Economists expected the index to fall to 62.2%.