A worker performs a quality inspection on forged aluminum truck wheels along the manufacturing line at the Alcoa aluminum factory October 24, 2006 in Szekesefehervar, Hungary. Alcoa bought the factory, once one of the main suppliers of semi-finished aluminum in the former East Bloc, in 1993. Sean Gallup/Getty

The US economy added 209,000 jobs in July, more than expected, while the unemployment rate returned to a 16-year low of 4.3%, the Labor Department said in a report Friday.

"This was a dull report in a good way," said Eric Winograd, a senior economist at AllianceBernstein. "I don't think that there's any doubt that the labor market is performing very well, and today's jobs report is another piece of evidence."

Economists had forecast that 180,000 jobs were created during the month, according to Bloomberg. Hiring in June was revised to a faster rate than previously reported, by 9,000 jobs to 231,000.

The leisure and hospitality industry added 62,000 jobs last month, or nearly one in every three jobs created, led by restaurants. Retail hiring, which has slowed this year amid mass department-store closings, increased for the first time since January by 900 on net. General-merchandise stores such as Walmart, which sell a variety of products, hired a net 4,200 workers.

Wage growth remained sluggish in July, with average hourly earnings increasing by 0.3% month-on-month — as expected — and 2.5% year-on-year (compared with 2.4% expected).



In theory, wages should be growing at a faster pace than this because the low unemployment rate suggests that the supply of workers available for hire is limited.

Lower worker productivity and a decline in unionization are among the reasons pay isn't rising faster. But wages are increasing faster for lower-paying jobs.

"We're starting to see a lot more jobs being posted that don't require a college degree," said Cathy Barrera, the chief economic adviser at ZipRecruiter. "That's very good news," she said, and complements the increase in labor-force participation among young people.

The share of Americans over 16 who were active in the workforce rose in July to 62.9% from 62.8%. One group that has been returning to the jobs market at a quick rate is prime-age workers ages 25 to 54. Their labor-force-participation rate rose to a new postrecession high of 78.7%, showing that the nine-year-old economic expansion had attracted them back into the workforce.