By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The U.S. created a modest 169,000 new jobs in August, the number of positions created in July was slashed and more people dropped out of a labor force in a sign that hiring conditions worsened toward the end of the summer.
The disappointing employment report could throw a wrench in the Federal Reserve’s plan to begin to ease the throttle on a massive economic-stimulus program.
The unemployment rate, meanwhile, ticked down to 7.3% from 7.4%, but that was because fewer people were looking for work, according to new figures released by the Labor Department Friday. The labor force participation rate fell to 63.2%, the lowest level since the summer of 1978.
Employment gains for July and June were lowered by a combined 74,000, with the biggest revision taking place in July, the Labor Department said.
The number of new jobs created in July was slashed to 104,000 from 162,000 — the smallest gain since June 2012.
And June’s job gains were trimmed to 172,000 from 188,000.
Treasury yields came rapidly down after the data, with the 10-year 10_YEAR -3.64% losing over 10 basis points. Stock futures SPU3 +0.41% extended gains.
The private sector added 152,000 jobs in August and government increased employment by 17,000.
Average hourly wages rose 5 cents to $24.05, while the average workweek edged up 0.1 hour to 34.5 hours.
Economists polled by MarketWatch had anticipated a 173,000 increase in jobs last month.
The weaker-than-expected jobs report could cause the Fed to reconsider whether to start to scale back its bond-buying program later this month. Most observers expect the Fed to sound the retreat at its two-day meeting that ends Sept. 18.
The central bank has been buying $85 billion in government and mortgage-backed bonds every month as means to keep U.S. interest rates low and spur economic growth.
