U.S. employers added 142,000 jobs in August as payroll growth slowed significantly after six months of strong gains, the Labor Department said Friday.
The unemployment rate, which is calculated from a different survey, fell to 6.1% from 6.2% in July, the Labor Department said.
Economists' median forecast in Action Economics' survey was that 220,000 jobs were added last month. Monthly job growth has averaged over 215,000 this year, up from 194,000 in 2013, despite harsh winter weather that slowed the economy in the first quarter.
Until August, employers had added 200,000-plus jobs for six straight months — the longest stretch since 1997.
Last month, businesses added 134,000 jobs, with professional and business services and healthcare driving the increase. Federal, state and local governments added 8,000.
Job gains for June and July were revised down by a total 28,000. June's was revised to 267,000 from 298,000 and July's to 212,000 from 209,000.
While the August tally was disappointing, it could get revised upward in future months' reports. High Frequency Economics cautioned that in previous years, the August job totals initially reported routinely were below expectations but estimates were raised later.
For example, in 2011, the Labor Department initially reported there were no job gains in August. As the department obtained more information not available when that estimate was made, the total was subsequently adjusted up to a 57,000 gain and then to a 104,000 gain on the second revision two months later.
Last year, August job gains were revised up from 169,000 in the first estimate to 193,000 and then to 238,000. Following annual revisions to adjust for sampling errors in the data, the total was revised to 202,000.
Several economists shrugged off last month's slowdown as a blip.
"Nothing alters our fundamental view that the labor market is broadly improving," says Mike Schenk, chief economist of the Credit Union National Association.
He added that the August figure "is at odds with some of the other (employment) data we've been looking at."
Schenk estimates that monthly job growth will average about 220,000 the rest of the year and for all 2014.
In August, professional and business services led the job gains, with 47,000, while health care added 42,7000 and construction, 20,000. Manufacturing payrolls were unchanged.
Some other labor market indicators showed modest improvement. The number of Americans out of work at least six months fell by 192,000 to 3 million. The long-term unemployed still make up 31% of all the jobless.
And the so-called underemployment rate — which includes discouraged workers who have stopped looking for jobs and part-time employees who prefer full-time work as well as the unemployed — fell to 12% from 12.2%.
But the average work week was unchanged at 34.5 hours for the sixth straight month. Employers often add hours before adding staffers. Hourly earnings rose six cents to $24.53 and are up just 2.1% over the past year, in line with the tepid increases so far in the five-year-old recovery.
Several recent reports had pointed to continued strong job gains for August. Private payroll processor ADP this week said businesses added 204,000 jobs last month. Initial jobless claims, which reflect layoffs, have fallen to pre-recession levels. And a survey of the service sector, which makes up 80% of the economy, showed growing employment in August for the sixth straight month.
Job openings, however, have outpaced hiring, with many employers struggling to find skilled workers in industries such as technology, energy and manufacturing.
And economists are awaiting faster wage gains that can drive consumer spending and sustained economic growth.
The surprising slowdown in jobs growth last month gives the Fed more reason to wait before raising interest rates. Fred Katayama reports. Video provided by Reuters Newslook