The U.S. Bureau of Labor Statistics also reported that the U.S gained 157,000 jobs in July.
The economy grew in the April-June quarter at its fastest pace in four years.
Unemployment has fallen this year to its lowest level since 2000, and many economists predict unemployment will fall even further this year. The number of unemployed people rose to 6.3 million.
Meanwhile, average hourly earnings increased slightly, as the tightening labor market continues to put only modest upward pressure on employee earnings.
Like weather forecasters predicting sunny skies in Southern California, economists have watched the labor market produce consistent monthly increases in hiring recently.
"Topline job growth ... has yet to translate into meaningful improvement in wages", noted Lindsey Piegza, chief economist for Stifel Fixed Income. Economists were watching manufacturing closely for signs of a drag from the Trump administration's escalation of trade tensions with China and allies.
The moderation in employment gains and steady wage growth could ease concerns about the economy overheating, and keep the Fed on a gradual path of monetary policy tightening. The unemployment rate for those without a high-school diploma fell to 5.1 per cent, the lowest on record.
Friday's report also included a revision to prior jobs reports, which now suggests the economy added 248,000 jobs in June, up from an initial report showing 213,000 new jobs were added to the economy.
One weak spot for economy, however, is the housing market. Consumer prices rose 2.9 percent in June from a year earlier, more than the average wage gain. All told, 8.072 million Americans were working more than one job - above the recessionary peak of 8.071 million hit in August 2008.
Restaurants, bars and hotels added 40,000 jobs, the most in nine months.
People looking for jobs at factories had a better chance of being hired last month.
The slip in hiring last month may be temporary. Utilities employment fell for a third straight month and the finance and insurance industry shed 9,400 jobs last month. Mining employment registered its first decline in 10 months in July (-4,000) but is likely to bounce back with higher energy prices propelling activity in the sector.
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