WASHINGTON: The United States posted disappointing jobs growth in August but the unemployment rate fell, according to government data Friday that kept expectations of a Federal Reserve stimulus taper on track.
The economy added 169,000 jobs in August, the Labor Department reported, fewer than the 177,000 expected by analysts.
And the prior two months' job numbers were revised sharply lower, slashing July jobs growth to 104,000.
The unemployment rate ticked down a tenth point to 7.3 percent, the lowest rate since December 2008, but for the wrong reason: fewer people were actively seeking jobs.
The average forecast was for the jobless rate to hold unchanged from July at 7.4 percent.
Most analysts said the weak August labor report would not discourage the Fed from tapering its $85 billion a month asset-purchase program, known as quantitative easing, as soon as its September 17-18 monetary policy meeting.
"The August employment report was a touch weaker than we expected but it doesn't change our expectation that the Fed will begin dialing back its pace of asset purchases later this month," said Ryan Sweet, senior economist at Moody's Analytics.
"The Fed is going to look at the big picture," Sweet said.
The Fed has hinged any taper on continued broad improvement in the economy.
A batch of recent positive data would support that view, including an upward revision to second-quarter US economic growth to 2.5 percent, a strengthening housing market, robust auto sales, and strong ISM manufacturing and services sector surveys.
The Labor Department's jobs report was mostly tilted to the downside.
The private sector added 152,000 jobs in August, short of analyst expectations of 180,000.
Government, which has been shedding jobs in recent months, added 17,000 jobs last month, partly reversing July's decline of 23,000.
Significant downward revisions cut job growth in the prior two months by a combined 74,000 jobs.
The July number was slashed to 104,000 from 162,000, and the June total was lowered to 172,000 from 188,000.
Though the 7.3 percent jobless rate marked a new low after the Great Recession ended four years ago, it was not a sign of underlying strength in the labor market.
The labor force participation rate fell to 63.2 percent in August as the workforce shed more than 300,000 people.
The biggest job gains were in retail and leisure and hospitality restaurant, sectors that typically pay low wages.
"The data suggest that a weak labor market is forcing people to take bad jobs," said Dean Baker of The Center for Economic and Policy Research.
Gains in temporary help services employment jumped to 13,100 from 8,100 in July.
Construction job growth was flat, and manufacturing added a modest 44,000 jobs.
A bright spot was an increase in average hourly earnings of five cents to $24.05 that signaled potential gains in consumer spending, which represents the bulk of US economic activity.
"We still expect the Fed to start the tapering process at this month's meeting, although this report will keep the debate going," said Jim O'Sullivan of High Frequency Economics.
Michael Gapen at Barclays said the soft August report would not derail the Fed's march to "Septaper".
The impact of the federal government's "sequester" spending cuts likely played some role in the heavy revisions, he said.
Jason Schenker of Prestige Economics predicted the Fed would continue its asset-purchase program until at least the third quarter of 2014.
"Today's report is likely to lead to a very gradual Fed tapering announcement in September, with implementation thereafter," he said.
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