(USA TODAY)-- Employers added 169.000 jobs in August, as the labor market continues to show solid growth despite substantial federal spending cuts and a payroll tax increase.
The unemployment rate, which is calculated from a different survey of households, fell to 7.3% from 7.4%, the Labor Department said Friday. That's the lowest since December 2008. However, the dip came because 312,000 Americans stopped working or looking for work--not because of a rise in employment.
Economists' consensus forecast was that 180,000 jobs were added last month. The report has been highly anticipated by investors because decent growth could persuade the Federal Reserve to begin dialing back its bond-buying stimulus at its Sept.17-18 policy-making meeting, as many economists expect.
Friday's report showed a midyear slowdown in job growth has been more pronounced than initially estimated. The Labor Department revised its estimate for job gains in June to 172,000 from 188,000 and in July, from 162,000 to 104,000.
In August, businesses added 152,000 jobs, while federal, state and local governments added 17,000. The retail and health care industries led the job gains.
Some other signs of the job market's health were encouraging. The average workweek tose to 34.5 hours from 34.4 hours. Employers often increase the hours of existing workers before adding new ones. And average hourly earnings rose 5 cents to $24.05.
Also, the underemployment rate-which includes part-time workers who prefer full-time jobs and those who've stopped looking for work, as well as the unemployed-fell to 13.7% from 14%.
The number of temporary workers posted a modest increase of 13,000. Employers traditionally hire such short-term employees before bringing on more permanent staffers. In this recovery, however, many have added such contingent workers for extended period and have held off on hiring permanent employees out of uncertainty.
Retailers led job gains with 44,000. Education and health services added 43,000, leisure and hospitality, 27,000, and professional and business services, 23,000. Manufacturers added 14,000 jobs, while payrolls in the construction industry were unchanged.
Reports Thursday fueled hopes for continued steady payroll advances. Initial jobless claims fell by 9,000 last week. Payroll processor ADP estimated that the private sector added 176,000 jobs last month. And a measure of service sector employment in August rose sharply.
The economy and job market are expected to gain steam late this year as the impact of the federal spending cuts fades. But another likely showdown in Washington this fall over raising the government's borrowing authority could restrain growth.