U.S. employers added 162,000 jobs in July, a modest increase and the fewest since March. Still, the unemployment rate fell to a 4 1/2 year low of 7.4 percent, a hopeful sign in an otherwise lackluster report.
Unemployment declined from 7.6 percent in June because more Americans found jobs, and others stopped looking and were no longer counted as unemployed.
Still, Friday’s report from the Commerce Department pointed to a less-than-robust job market. It suggested that the economy’s subpar growth and modest consumer spending are making many businesses cautious about hiring.
The government said employers created a combined 26,000 fewer jobs in May and June than previously estimated. Americans worked fewer hours in July, and their average pay dipped. And many of the jobs employers added last month were for lower-paying work at stores, bars and restaurants.
For the year, job growth has remained steady. The economy has added an average 200,000 jobs a month since January, though the pace has slowed in the past three months to 175,000.
Friday’s jobs report “reveals a mixed labor market picture of continued improvement, but at a still frustratingly slow pace,” said Scott Anderson, chief economist at Bank of the West.
The reaction from investors was slightly downbeat. The Dow Jones industrial average dropped 38 points in late-morning trading, and broader stock indexes also declined. The yield on the 10-year Treasury note fell to 2.62 percent from 2.71 percent.
The Federal Reserve will review the July employment data in deciding whether to slow its $85 billion a month in bond purchases in September, as many economists have predicted it will do. Weaker hiring could make the Fed hold off on any pullback in bond buying, which has helped keep long-term borrowing costs down.
Yet it’s possible that the lower unemployment, along with the job gains the past year, could convince the Fed that the job market is strengthening consistently.