July and August averaged 263,000, though the average for the year is 181,500 and 204,000 for the past 12 months. Private job growth was just 126,000 in August.

"We had a couple above numbers in the last two months. This is a below-average number," said Jeff Kleintop, chief global investment strategist at Charles Schwab. "All that suggests the job market is OK, but it probably does put September off the table" for an interest rate hike.

Wall Street economists were expecting the nonfarm payrolls report to show a gain of 180,000 in August, with the unemployment rate ticking down one-tenth to 4.8 percent. Wage growth slowed.

Nonfarm payrolls increased just 151,000 for the month, extending the futility August has experienced over the years. This is now the 10th time in the past 13 years the month whiffed on market expectations.

August traditionally has been a difficult month for jobs numbers, and 2016 proved no exception, likely putting the Federal Reserve on hold for a rate hike anytime soon.

The unemployment rate instead was unchanged at 4.9 percent, according to the Bureau of Labor Statistics. A more encompassing rate that included discouraged workers and those holding part-time jobs for economic reasons held steady at 9.7 percent. Among demographic group, the unemployment rate for those without a high school diploma jumped from 6.3 percent in July to 7.2 percent.

August has been a notoriously volatile month for the jobs numbers. The previous five reports have been revised upwards by an average of 71,000. In 2011, the initial report was zero, which later was revised up to 107,000. Goldman Sachs economists attribute the statistical noise to the start of the school year.



Those counted as not in the labor force increased by 58,000 to 94.4 million.

The report comes at a critical time as the jobs numbers are being watched closely by the Federal Reserve. The U.S. central bank meets Sept. 20-21, with the possibility of a rate hike still on the table.

In all, there was little in the report to spur the Fed. Traders immediately cut the probability of a September hike from 27 percent to 12 percent. However, stock market traders like the report, boosting futures and indicating a positive open.

"In many respects, this report was a sweet spot," said Brad McMillan, chief investment officer at Commonwealth Financial Network. "It's good enough that the economic growth continues, you're going to see the economic recovery move along. But it's not putting any more heat on the Fed to raise rates in September. In fact, it's going to dial them back a little bit."

In addition to the below-expectation number, wage growth actually took a step back, with hourly earnings up just 3 cents and an annualized pace of 2.4 percent. The average work week declined 0.1 percent to 34.3 hours.

That was largely because the biggest jobs gains came in bars and restaurants, which added 34,000 positions. Social assistance grew by 22,000, professional and business services added 22,000 and Wall Street-related positions grew by 15,000. Health care also contributed 14,000.



On the upside, the household survey showed full-time jobs increased by 319,000, while part-time positions declined by 388,000.

"The August employment report is not going to convince Fed officials to vote for a rate hike later this month, although an increase in December is still likely," said Paul Ashworth, chief U.S. economist at Capital Economics.

In recent days Fed officials have been indicating that a rate hike, just the second in more than 10 years, could be on the way if the data cooperate. However, Thursday brought news that manufacturing is back in contraction mode and construction has stalled.

CORRECTION: This headline was updated to show the expected number of jobs created was 180,000.

