The US unemployment rate fell to a better-than-expected 7.4 per cent in July but jobs growth slowed sharply, official data shows.
The Labor Department said on Friday the US added 162,000 jobs last month, well below the 175,000 expected on average by analysts.
But the decline in the jobless rate from 7.6 per cent in June was twice as big as the estimated one-tenth point drop.
At 7.4 per cent, the jobless rate is the lowest since December 2008, when it was 7.3 per cent.
That is markedly better than in July 2012, when the jobless rate stood at 8.2 per cent.
The improvement in the unemployment rate increased the chances the Federal Reserve will begin to taper its bond-buying program in September, analysts said.
"The Fed is on track to hit its 7.2 to 7.3 per cent Q4 unemployment rate target, and that probably matters more to FOMC members - especially the hawks and near-hawks - than the tiny slowing in payroll growth," said Ian Shepherdson of Pantheon Macroeconomics.
"We expect a robust August employment report, and think September tapering is a 70/30 bet."
Jobs growth for the prior two months was revised downward by a combined 26,000.
The June figure was revised to 188,000 jobs from 195,000, and the May reading was revised to 176,000 from 195,000.
Over the prior 12 months, jobs growth averaged 189,000 per month.
