A job seeker holds a job application during the San Francisco Hirevent job fair at the Hotel Whitcomb.
A job seeker holds a job application during the San Francisco Hirevent job fair at the Hotel Whitcomb. - 
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96,000 jobs were created in August -- that's far less than expectations, which neared 130,000. The unemployment rate ticked down--from 8.3 percent to 8.1 percent. See the Bureau of Labor Statistics' report here.

"It's disappointing," said Chris Low, chief economist at FTN Financial. "It's especially disappointing because yesterday we had some job numbers that looked quite a bit better than this, but these are the official data and this is what it shows...100,000 jobs is not enough."

The White House's Alan Krueger said he tried to look at the bigger picture. "The monthly numbers tend to be volatile, they can be revised substantially month-to-month. And I think we see a picture of an economy that's continuing to heal from the very deep wounds from the Great Recession that began at the end of 2007."

The sectors that were growing are ones that have been growing: hospitality -- eating and drinking places -- health care, professional and business services. Meanwhile, the number of temporary workers fell. That may indicate caution from employers about hiring people permanently down the road. Manufacturing also saw losses.

"We had big losses in manufacturing -- actually the biggest decline since the summer of 2010" said Low. "We had losses in mining, which is people who are exploring for oil and gas; that's down because natural gas prices are down."

Krueger said the country was still on track to create a million manufacturing jobs, just as President Obama had proposed last night during his convention speech.

"I think if the proposals that the president has made are enacted, that will lead to a million manufacturing jobs as he said as a goal last night," said Krueger. "He has a very robust agenda for manufacturing, including creating institutes of manufacturing innovation, which will combine university researchers, community colleges to train workers, companies, entrepreneurs the lab system. And we have set up one of these institutes using funds that were available administratively, and the president has requested funds for up to 13 of those. So I think that's something that can change the manufacturing landscape."

The drop in the unemployment rate probably has less to do with people finding jobs after looking for a while, than with people dropping out of the labor force altogether -- the civilian labor force and the workforce participation rates both fell in August.

"The unemployment rate was down only because about 370,000 people dropped out of the labor force," Low said. "They're so discouraged that they stopped looking. The number 7 million now who are out of the labor force, saying they want work, is the highest since the government started tracking that statistic."

Krueger said there was more to the numbers. "This is partly demographics. We have an older workforce, we're going to see more people retire in the future. What's most important is to keep our eye on job creation."

There were also downward revisions of the numbers from June and July. That makes the average job creation during the summer -- 94,000 per month -- even lower than originally thought.

The Federal Reserve wants to see the unemployment rate come down -- that's one of their mandates. But not for this reason, especially with job creation so weak. So this government employment report is sure to provide fodder for those who would like to see the Fed step out from the sidelines to do more stimulus or monetary easing to get hiring going again.

Low said he believes it will happen: "I think [Fed chief Ben] Bernanke's going to have to fight hard for it, but he will get another round of stimulus before the end of the year."

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Follow Mitchell Hartman at @entrepreneurguy