WASHINGTON (CNNMoney) — Hiring continued at a slow pace in August, and the unemployment rate fell as more Americans dropped out of the labor force.
The U.S. economy added 169,000 jobs in August, the Department of Labor said Friday.
Although that was an improvement from 104,000 jobs added in July, it was also slower than the average pace of job growth over the last 12 months, and missed economist expectations.
Job growth for both June and July was also revised lower, by a total of 74,000 jobs.
Meanwhile, the unemployment rate fell to 7.3%, but the decline came for the wrong reasons, as 312,000 people dropped out of the labor force. Only 63.2% of Americans now participate in the labor force -- meaning they have a job or are looking for one. That's the lowest rate since August 1978.
The report was being closely watched for signs that the Federal Reserve will begin pulling back on its controversial bond-buying program later this month. The Fed has said that the timing of the "tapering" would depend heavily on improvement in the labor market.
Overall, the trend remains the same: Modest hiring has continued at a rate of about 184,000 jobs a month for the last year, but that's not nearly fast enough for the 11.3 million people who remain unemployed.
The economy needs at least 200,000 new jobs a month just to keep pace with population growth.