While the overall jobless rate fell to 8.1% from 8.3% as more people dropped out of the labor market, the economy added a poor 96,000 jobs in August, the Labor Department said Friday.
The number of net new jobs generated by the weak economy was lower than expected, and likely to strengthen the case at the Federal Reserve for more action to boost growth.
While the total number of official jobless fell to 12.5 million from 12.8 million people, the Labor Department's data showed a sharp decline in the size of the labor force and a rise in those not looking for jobs.
The size of the civilian labor force fell by 368,000, and the employment-to-population ratio hit a new low of 58.3%, compared with the 60%-plus level that was normal before the 2008-2009 recession.
The department also revised lower its job-growth numbers from the previous two months, another sign of the inability or reticence of U.S. businesses to hire even as federal and local governments pare their rolls to cut costs.
Moreover, the duration of unemployment for those looking for jobs -- a key worry of Federal Reserve Chairman Ben Bernanke -- was little-changed, with around 40% still searching for work for more than 27 weeks.
Last week Bernanke told a conference that labor market stagnation is "a grave concern," saying that "persistently high levels of unemployment will wreak structural damage on our economy that could last for many years."
The fresh data will feed into the Fed's policy board meeting on September 12-13, adding pressure on it to come up with more ways to help economic growth.
Copyright Agence France-Presse, 2012