WASHINGTON -- American employers hired fewer workers than forecast in August, and the unemployment rate dropped because people left the workforce.
The economy generated just 142,000 jobs in August, the Labor Department said Friday, well below the average of 212,000 over the previous 12 months. The unemployment rate fell to 6.1 percent from 6.2 percent, but only because more people without jobs stopped looking for one and were no longer counted as unemployed.
Employers also added 28,000 fewer jobs in June and July than the government previously had estimated.
"The shortfall in payrolls is disappointing, but it sure looks like a fluke, not a trend," said Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago.
The slowdown was unexpected after most recent economic data had indicated the economy was growing at a healthier pace. Some analysts noted that other measures of the job market remain solid and that August's figures could mark a temporary slowdown.
The figures "will inevitably spark speculation that the U.S. recovery is somehow coming off the rails again," said Paul Ashworth, an economist at Capital Economics. "However, we're not too concerned by what is probably just an isolated blip."
The weaker-than-expected figures make it unlikely that the Federal Reserve will speed up its timetable for raising interest rates. Most analysts expect the first rate increase around mid-2015.
August's job growth was well below the average monthly increase of 212,000 over the past 12 months. Job gains have averaged 207,000 a month in the past three months, still a healthy pace.
Patrick O'Keefe, director of economic research at the accounting and consulting firm CohnReznick, said he found Friday's report puzzling. O'Keefe noted that the tepid job growth was inconsistent with surveys showing businesses and consumers gaining confidence.
He also said August's job figures tend to be unusually volatile and typically are revised later as government statisticians adjust for unusual seasonal factors such as the reopening of school and Labor Day.
The biggest drops in hiring last month occurred in retail, which shed 8,400 jobs, after gaining 21,000 in July, and in manufacturing, where employment was flat, down from a gain of 28,000 in July. Transportation and warehousing added only 1,200 jobs after adding 19,100 in July.
There were some brighter spots in the report. Higher-paying fields, including accounting, engineering and management, reported solid job gains. And the number of people working part time who would prefer full-time work fell.
Recent reports of strength in manufacturing and construction had raised hopes that hiring in August would be solid.
Factories expanded last month at the best rate in more than three years. Factory output is being driven in part by auto sales. Americans bought more cars last month than in any other August in 11 years. And builders increased spending on construction in July by the most in more than two years.
In addition, fewer Americans are seeking unemployment benefits, which means that companies are laying off few workers.
While payrolls play a role in guiding the Federal Reserve's monetary policy, central bankers look at other figures to determine the strength of the labor market. Worker pay, which influences the outlook for spending, is an important factor in determining whether the job market is healed and can withstand tighter monetary policy.
Wage gains have been sluggish since the recession ended in 2009, and consumers have remained cautious. Consumer spending dipped in July, the first decline since January.
In August, average hourly pay rose 6 cents to $24.53, 2.1 percent higher than a year ago and barely ahead of the overall 2 percent inflation rate.
"There has been little evidence of any broad-based acceleration in either wages or compensation," Fed Chairman Janet Yellen said at an Aug. 22 speech at the Kansas City Fed's economic conference in Jackson Hole, Wyo. Limited income growth has held back consumer spending, which accounts for 70 percent of the economy.
Information for this article was contributed by Christopher S. Rugaber, Paul Wiseman and Josh Boak of The Associated Press and by Alex Tanzi and Victoria Stilwell of Bloomberg News.
Business on 09/06/2014