But most of the decline in total employment, which is seasonally adjusted, came from the departure of 158,000 temporary Census workers and the impact of a strike at Verizon, the nation's largest local phone company and wireless business, the Labor Department said Friday.
The report showed that private payrolls actually rose but only by a seasonally adjusted 17,000 in August. The government said private payrolls would have risen by 102,000 had it not been for the strike.
Many analysts predicted that the jobless rate would hold steady at 4 percent in August and that total employment â€“ private and government payrolls â€“ would fall by 33,000.
The nation's jobless rate dipped to a 30-year low of 3.9 percent in April, rose to 4.1 percent in May and then edged down to hold at 4 percent in June and July.
Average hourly earnings, a key gauge of inflation pressures, moderated a bit in August, rising 0.3 percent to $13.80 an hour, down from a 0.4 percent gain in July.
While job and wage growth is good for workers, economist worry that a too-strong combination might worsen inflation. Their fear: employers scrambling to find scarce workers will recruit them with big boosts in wages and benefits, adding costs that could be passed to consumers as higher prices.
The Federal Reserve has boosted interest rates six times since June 1999 to slow the economy and stave off inflation.
In August, the employment picture was mixed.
Manufacturing lost 79,000 jobs in August, the biggest drop since July 1998, and more than offsetting a large increase the month before.
Retailers cut 35,000 jobs, following two months of above-average gains. The decline largely reflected losses at bars and restaurants.
In transportation and public utilities, employment fell by 64,000 in August as 87,000 workers in the telephone industry were on strike and thus off company payrolls during the survey period.
Employment at construction companies showed no change in August. Average monthly growth so far this year has been 15,000, compared with 25,000 per month for all of 1999.
Finance, insurance and real-estate jobs grew by 25,000 in August. Employment in the services industry, which includes an array of business services, grew by 160,000. Jobs were added in the social services, engineering and management services fields.
The employment picture has been complicated this year by the swing in government hiring for the census. As a result, some economists have been focusing on the changes in private-sector employment as a better indication of what's happening in the labor market.