Total nonfarm payroll employment increased by a mere 173,000 in August, while the unemployment rate edged down to 5.1% because of people dropping out of the workforce, bringing the labor participation rate down to a 38-year low.

What job gains there were occurred in health care, social assistance and financial activities, while manufacturing and mining lost jobs.

Another 261,000 Americans dropped out of the labor force, pushing the total number of potential workers who are not in the labor force to a record 94 million, up 1.8 million since August 2014.

Since 2007, some 14.9 million have left the labor force, and in that time span only 4 million jobs were created.

Selma Hepp, chief economist for Trulia, said that most of the anticipated improvements, particularly long-term unemployment, have not shown gains. Wages, however, are finally showing some upward pressure, she noted.

“Employment rate among young adults, 18-34 years old, remained largely unchanged, though previous months showed some improvement,” Hepp said. “As job stability improves among Millennials, many will be entering the housing market as first-time buyers in ebbs and flows. No doubt, the sheer mass of the millennial generation will be a substantial tail wind for the housing market in the upcoming years. In fact, a recent Trulia survey, found that more than 7 in 10 Millennials plan to buy in 2018 or later.”

Hepp says she doesn’t think the Federal Reserve is likely to increase interest rates when it meets later this month. While the U.S. job market is in its third year of robust growth, the Fed is taking a broader and more comprehensive approach in making their decision.

“Recent stock market volatility as well as slowing economic growth abroad will be major factors, as will the U.S. economy’s persistent improvement. But even if the Fed increases interest rates, any increases will be modest and gradual. This means the actual impact on homebuyers will be minimal,” Hepp said.

Moody’s Analytics senior economist and managing director, Sophia Koropeckyj, said she doesn’t think this weak jobs report is of concern.

“The August payroll employment report can be ignored. An unusually low survey response rate of 69.9% means that substantial revisions will occur in the next two months,” Koropeckyj said. “Seasonally adjustments based on a full sample render the seasonally adjusted data further suspect.

“To be sure, some challenges facing the U.S. labor market cannot be ignored: energy and export dependent industries are struggling under the weight of low prices and a high dollar,” she said.

Capital Economics says it’s hard to say whether the report will factor into the September meeting of the Federal Open Market Committee.

“August’s employment report is fairly mixed and can be used to make a case for or against a rate hike at the upcoming FOMC meeting. As far as we’re concerned, the September meeting is a 50-50 toss-up,” they say in a client note. “The more modest 173,000 increase in non-farm payrolls, well below the consensus forecast of a 217,000 gain, obviously suggests the Fed should hold fire. But the gains in the preceding two months were revised up by a combined 44,000, average hourly earnings increased by a more robust 0.3% m/m, and the unemployment rate fell to a seven-year low of 5.1%, from 5.3%.”

Doug Duncan, chief economist, Fannie Mae, said he doesn’t see this report as too negative.

“Despite the weaker than expected headline nonfarm payroll growth, today’s jobs report is a solid one, with sizable upward revisions to prior months’ gains, a jump in average hourly earnings, and a tick up in the average work week,” Duncan said. “The unemployment rate fell to a seven-year low, and for good reasons, as the labor force participation rate held steady. The soft headline may not even be an issue next month, as August payroll gains typically get meaningful upward revisions.

“While the Fed could find reasons to delay raising rates, including increased downside risk for inflation and financial instability, we believe that it will not find one in this jobs report,” Duncan said. “We continue to call for a September lift-off, with a one-and-done hike this year on the way to normalizing monetary policy going forward.”