So-so summer: Job growth disappoints; rate drops

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Job growth continued in July as the U.S. economy added another 162,000 positions—enough to keep the recovery theme going but not a level likely to have a major effect on monetary policy.

The number missed economist expectations of 184,000 and caused some movement in markets.

Stocks opened lower and gold pared earlier losses, while Treasury yields headed lower, with the 10-year note most recently at 2.64 percent.

However, the general feeling was that the numbers were unlikely to budge the Federal Reserve from its current position on quantitative easing.

"Bottom line: Disappointment, but not enough disappointment to dissuade the Fed from ending QE," said Steve Blitz, chief economist at ITG.

The Bureau of Labor Statistics also reported Friday that the unemployment rate slipped to 7.4 percent, a shade below the predicted 7.5 percent.

(Read more: The coolest jobs of 2013)

A broader gauge of unemployment that includes the underemployed and those who have quit looking for work also fell, from 14.3 percent in June to 14 percent in July.

"Today's jobs data is terrifying for Main Street," said Todd M. Schoenberger, managing partner at LandColt Capital in New York. "Despite the proactive actions from the Fed and stimulus help from Capitol Hill, the labor market remains stuck in quicksand. For Wall Street, however, this is terrific news."

Most of the job creation came on the low end—in the retail trade and hospitality industry of bartenders and wait staff, with respective gains of 47,000 and 38,000.

Professional and business services also added 36,000.

(Read more: Why underemployment may be worse than it looks)

Previous months' job creation numbers were revised lower, bucking a trend in which the counts mainly have been taken up.

The BLS now puts May job growth at 176,000 from the previously reported 195,000, while June's figure fell to 188,000 from 195,000.

At the same time, long-term unemployment rose, with the average duration of joblessness now at 36.6 weeks.

And wage growth fell: After rising 10 cents an hour last month, average wages fell 2 cents to $23.98 an hour, while the average work week decreased by 0.1 hours to 34.4 hours.

The jobs number is a critical metric for Federal Reserve decision-making.

The central bank has pegged a 6.5 percent unemployment rank for one of two benchmarks that will signal it's time to start normalizing interest rates.

However, a steady move lower also would push the Fed toward pulling back on the $85-billion-a-month bond-buying program known as quantitative easing.

(Read more: Steady Fed: Printing presses to keep on rolling)

"The self-sustaining trend in employment growth is likely strong enough to allow the Federal Reserve to begin tapering its quantitative easing by the end of the year," said Kathy Bostjancic, director of macroeconomic analysis at The Conference Board.

Prospects of a QE tapering helped send markets into a selling frenzy in late May, but that has abated and stock market indexes have reached new highs as investors became convinced that a rate increase is still a long way off.

In addition to a falling jobless rate, the Fed is looking for inflation to increase to 2.5 percent.

Get the full jobless report here.

By CNBC's Jeff Cox. Follow him @JeffCoxCNBCcom on Twitter.