WASHINGTON - The U.S. unemployment rate fell to a four-year low of 7.4% in July as the economy added 162,000 jobs, the Labor Department said Friday in a weaker-than-expected report.

The decline in the jobless rate from 7.6% in June surprised analysts, who had expected only a one-tenth point drop.

Although jobs growth came in less than expected, analysts pointed to the trend of a slowly improving labor market four years after the Great Recession ended.

"The pace of U.S. job creation took a step back in July, but the modest slowdown does not alter the forecast for the rest of 2013," said Ryan Sweet of Moody's Analytics.

Sweet added that the slowdown was "inevitable" in an economy that has had an average 1% growth rate for the past three quarters.

The mixed jobs report raised conflicting speculation about whether the Federal Reserve would soon begin tapering its $85 billion-a-month bond-buying program.

The White House said the data further confirmed the economy was recovering, and called on opposition Republican lawmakers to replace the sequester – automatic severe spending cuts – with a balanced deficit reduction plan.

"With the recovery entering its fifth year, we need to build on the progress we have made so far and now is not the time for Washington to impose self-inflicted wounds," said Alan Krueger, President Barack Obama's chief economic adviser.

John Boehner, the Republican Speaker of the House of Representatives, said Obama's stimulus and other fiscal policies had "left our economy treading water with slow growth, high unemployment, and stagnant wages" and argued for his business-friendly party's alternatives.

Private-sector employers appeared cautious about expanding their payrolls amid tepid growth in the economy, adding a much weaker-than-expected 161,000 jobs, down from a downwardly revised 196,000 in June.

In a sign of the weakness of the jobs market, about half of the gains were in retail trade and food services and bars, typically low-paying jobs.

The government added 1,000 jobs.