WASHINGTON (AP) — U.S. employers added 162,000 jobs in July, the fewest since March. The gains were enough to lower the unemployment rate to a 4½ -year low of 7.4 percent, a good sign in an otherwise lackluster report.
The Labor Department said Friday that unemployment fell from 7.6 percent in June as more Americans found jobs.
Still, the economy created 26,000 fewer jobs in May and June than previously estimated. Americans worked fewer hours in July, and their pay dipped. The figures suggest weak economic growth may be making businesses cautious about hiring.
Job growth for the year still remains solid. The economy has created 200,000 jobs a month since January. However, the pace has slowed in the past three months to 175,000.
"A clearly weaker-than-expected report, but one should not overstate it — the unemployment rate continues to trend down and average job growth of 175,000 will be more than enough to continue to push it lower," Peter Newland, an economist at Barclays Capital, said in a note to clients.
Reaction to the employment report on Wall Street was slightly negative. Stock index futures gave up early gains and were little changed shortly after the report came out. The yield on the benchmark 10-year Treasury note fell to 2.64 percent from 2.71 percent as investors bought U.S. government bonds.
The Federal Reserve will pay particularly close attention to the July employment data as it decides whether to scale back its $85 billion a month in bond purchases later this year. Weaker hiring could make the Fed hold off on tapering at its September meeting. However, economists noted that the drop in unemployment, along with steady hiring gains over the past year, could be enough to convince the Fed that the job market has made significant gains.
"While July itself was a bit disappointing, the Fed will be looking at the cumulative improvement," said Paul Ashworth, chief U.S. economist at Capital Economics. "On that score, the unemployment rate has fallen from 8.1 percent last August, to 7.4 percent this July, which is a significant improvement."