The United States added 169,000 new jobs in August. The unemployment rate fell to 7.3%, down from 7.4% in July, the lowest level since December 2008.
But the Labor Department said this was because more people stopped looking for work.
The US Federal Reserve is expected to begin cutting stimulus measures in the coming months. The fed is buying $US85 billion in assets every month to support the economy, but officials have indicated an intention to reduce the programme.
The Labor Department also revised down the number of jobs added in July, from 162,000 to 104,000 - the fewest in more than a year.
The BBC reports the labour force participation rate fell to 63.2%, a sign that fewer people are active in the workforce.
Some economists have argued this is due to an ageing population, but many think it is due to workers discouraged after many years of unemployment or underemployment.
The mediocre jobs report may add fuel to the argument that the US economic recovery is not yet robust enough to sustain itself without the additional help of the Fed.
The next meeting of the federal open market committee is set to take place from 17 - 18 September.
