US Economy Adds Only 96K Jobs; Unemployment Rate at 8.1 Percent

A disappointing jobs report was released on Friday and could slow President Obama's momentum coming out of the Democratic National Convention.

While the unemployment rate fell from 8.1 percent to 8.3 percent, employers only added 96,000 jobs last month. The reason for the lowered unemployment rate: many Americans have given up looking for jobs. The participation rate, a measure of the amount of people employed compared to the size of the workforce, fell to 63.5 percent in August - the lowest since September 1981 - from 63.7 percent a month earlier.

Eric Stein, vice president and portfolio manager of Eaton Vance Investment Managers in Boston said the the weaker than expected job growth number caused U.S. Treasuries to rally across the curve.

"You can't read anything positive into the drop in the unemployment rate because participation in the labor force also declined," he said. "This number all but guarantees the Fed will extend the low rate guidance at next week's policy meeting, It also makes QE3 a lot more likely, but certainly not guaranteed at the next meeting as they may just do it later in the year."

In July, 141,000 jobs were added and forecasters expected August's report to show some 125,000 new jobs.

Last night, already aware of the weak job report, President Obama asked Americans to give him another chance.

"I never said this journey would be easy, and I won't promise that now," Obama said. "Yes, our path is harder - but it leads to a better place. Yes our road is longer - but we travel it together. We don't turn back. We leave no one behind. We pull each other up. We draw strength from our victories, and we learn from our mistakes."

Republican Presidential nominee Mitt Romney criticized the weak report before heading on the campaign trail.

"If last night was the party, this morning is the hangover," Romney said in a statement. "For every net new job created, nearly four Americans gave up looking for work entirely. This is more of the same for middle class families who are suffering through the worst economic recovery since the Great Depression. After 43 straight months of unemployment above 8 percent, it is clear that President Obama just hasn't lived up to his promises and his policies haven't worked. We aren't better off than we were four years ago. My plan for a stronger middle class will create 12 million new jobs by the end of my first term. America deserves new leadership that will get our economy moving again."

In August, average hourly earnings for all employees on private nonfarm payrolls edged down by 1 cent to $23.52.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in August. The manufacturing workweek declined by 0.2 hour to 40.5 hours, and factory overtime was unchanged at 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.7 hours.

The gross debt of the United States hit $16 trillion, the Treasury Department announced Tuesday.