WASHINGTON — U.S. employers added 169,000 jobs in August and many fewer in July than previously thought. Hiring has slowed from the start of the year and could complicate the Federal Reserve’s decision later this month on whether to reduce its bond purchases.
The Labor Department said Friday that the unemployment rate dropped to 7.3 percent, the lowest in nearly five years. But it fell because more Americans stopped looking for work and were no longer counted as unemployed. The proportion of Americans working or looking for work fell to its lowest level in 35 years.
July’s job gains were just 104,000, the fewest in more than a year and down from the previous estimate of 162,000. June’s figure was revised to 172,000, from 188,000. The revisions lowered total job gains over those two months by 74,000.
Employers have added an average of just 148,000 jobs in the past three months, well below the 12-month average of 184,000.
Dow Jones industrial average futures rose modestly after the report was released. The yield on the 10-year Treasury note fell to 2.87 percent, from 2.95 percent, in the first few minutes after the jobs figure was released. Investors may view the weaker jobs picture as a sign that the Fed could hold off on slowing its bond buying when it meets on Sept. 17-18.
The report “is a mixed bag that can be used to support an immediate tapering of the Fed’s monthly asset purchases or delaying that move until later this year,” Paul Ashworth, an economist at Capital Economics, said. However, Ashworth said he still expects the Fed to begin tapering next month.
The Fed’s $85 billion a month in Treasury and mortgage bond purchases have helped keep home-loan and other borrowing rates ultra-low to try to encourage consumers and businesses to borrow and spend more. Chairman Ben Bernanke has said the Fed could begin slowing its bond purchases by year’s end if the economy continues to strengthen and end the purchases by mid-2014. After its September policy meeting, the Fed will announce whether it will taper its monthly purchases and, if so, by how much.
Another concern for the Fed is that most of the hiring in August was in lower-paying industries such as retail, restaurants and bars, continuing a trend that began earlier this year. Retailers added 44,000 jobs and hotels, restaurants and bars added 27,000. Temp hiring rose by 13,000.
In higher-paying fields, the report was mixed.
Manufacturers added 14,000, the first gain after five months of declines. Government jobs rose 17,000, the biggest gain in almost a year. The increase was all in local education departments. Federal employment was unchanged and state government lost 3,000 jobs.
Auto manufacturers added 19,000 jobs in August. Americans are buying more cars than at any time since the recession began in December 2007. Some of the jobs were also likely workers who were rehired last month after being temporarily laid off in July, when factories switched to new models.
But construction jobs were unchanged in August. And the information industry, which includes high-tech workers, broadcasting and film production, cut 18,000 jobs. The biggest losses were in the film industry.
There were some other positive signs in the report: Average hourly earnings picked up, rising 5 cents to $24.05. Hourly pay has increased 2.2 percent in the past 12 months, slightly ahead of the 2 percent inflation rate over the same period.
The average hourly work week ticked up to 34.5 from 34.4, a sign that companies needed more labor. That can also lead to larger weekly paychecks.
The jobs figures are in contrast with other recent data that suggested the economy could be picking up. Reports from the Institute for Supply Management, a trade group of purchasing managers, showed that manufacturers expanded at the fastest pace in more than two years last month. And service firms grew at the quickest pace in more than eight years, the ISM found.