WASHINGTON, DC-The Labor Department reported on Friday morning that 162,000 jobs were added to the economy in July, a number that disappointed economists and analysts that had been expecting a higher amount. The number also falls short of the 12-month average of 189,000 jobs created per month. Labor also reported that the unemployment rate dropped to 7.4%, but data from the report also suggested that more people had stopped searching for work in July (there were 988,000 discouraged workers in July, up by 136,000 from a year earlier).

In addition, Labor revised downward its numbers for May and June. May was revised from 195,000 to 176,000, and June was revised from 195,000 to 188,000.

By now the story of the economic recovery can be told in our sleep: it is slowly moving forward, characterized by occasional backward steps. This report certainly adds to that narrative as does this week's GDP report. Unfortunately it also holds some distinctively disappointing numbers for the commercial real estate industry specifically—namely, the construction sector lost 6,000 jobs during the month.

This scale back in construction employment raises fears that the emerging housing recovery could falter as well. Doug Duncan, chief economist of Fannie Mae, notes in a prepared statement that "signs of a temporary slowdown have appeared in recent data—likely induced in part by higher mortgage rates. Overall, he says, the July employment report pointed to a slight loss of momentum in the labor market. One silver lining, he says, is that the household survey was more upbeat with the unemployment rate falling two tenths to a recovery-low of 7.4%, as a gain in household employment countered a small drop in the labor force. Indeed, as the Labor Department report for July shows, there was some forward movement in some sectors.

Sectors that did add jobs included:

• Retail, which added 47,000 jobs in July.

• Leisure and hospitality, specifically employment in food services and drinking places, which saw employment increase by 38,000 in July.

• Professional and business services continued to trend up in July as well, with 36,000 jobs added.

• Financial activities employment increased by 15,000 in July.

• Wholesale trade, which added 14,000 plus in July.