U.S. employers added fewer jobs than expected in September and wage gains slowed, adding to evidence of decelerating growth in the domestic economy. But in a sign of a still-tight labor market, the unemployment rate unexpectedly declined to a fresh five-decade low of 3.5%.

Here were the main numbers from the Department of Labor’s September jobs report, versus consensus expectations compiled by Bloomberg:

• Nonfarm payrolls: 136,000 vs. +145,000 expected and +168,000 in August

• Unemployment rate: 3.5% vs. 3.7% expected and 3.7% in August

• Average hourly earnings MoM: +0.00% vs. +0.2% expected and +0.4% in August

• Average hourly earnings YoY: +2.9% vs. +3.2% expected and +3.2% in August

Friday’s jobs report also saw August’s payroll additions upwardly revised to 168,000, from the 130,000 previously reported, and July’s job gains were revised up by 7,000 to 166,000. Combined with September’s print, the new three-month average for job gains was just under 157,000, versus about 189,000 during the same three months of 2018.

Wage gains missed expectations on both a monthly and annual basis, remaining flat between August and September. Over last year, average hourly earnings rose just 2.9%, marking the slowest pace of increases since July 2018.

Beneath the headline payroll additions, the vast majority of the net gains continued to come from the private service-providing sector, as opposed to its goods-producing counterpart.

Under services, health and social assistance positions saw the strongest gains, with 41,400 new payrolls added in September. Professional and business service roles rose by 34,000 during the month. But retail – another subsection of the private service-providing sector – hemorrhaged the greatest number of jobs, losing 11,400 between August and September.

Employment changes in manufacturing turned negative in September, consistent with a recent contraction reported in manufacturing sector activity. The sector lost 2,000 payrolls during the month, versus a tepid gain of 3,000 expected.

But the bright spot in the Labor Department’s report was the unexpected drop in the unemployment rate to the lowest level since December 1969. Consensus economists had expected the jobless rate to hold at 3.7% for a fourth consecutive month.

And the lower unemployment rate came as the labor force participation rate held at 63.2%, indicating that a large pool of those in the labor force are holding onto or getting jobs.

“The decline in the unemployment rate to 3.5%, the lowest since December 1969, from 3.7%, was for all the right reasons – with a very strong 391,000 gain in the household survey measure of employment easily outpacing the 117,000 increase in the labor force,” Paul Ashworth, chief U.S. economist for Capital Economics, wrote in a note Friday.

Stocks futures initially fell in early trading and then pushed into positive territory after the release of the jobs report.

The Department of Labor’s “official” jobs report comes on the heels of a mixed batch of data on the labor market in September.

On the positive side, weekly unemployment claims remained low, and the Conference Board’s labor market differential – which represents the difference between the percentage of consumers who say jobs are plentiful and the percentage saying jobs are hard to find – remained relatively high at 33.2 in September, suggesting the labor market remained tight.

But other data had been less upbeat around the employment situation. On Wednesday, ADP/Moody’s released a report showing private sector payrolls rose by 135,000 in September, missing Bloomberg’s consensus expectations by 5,000. August’s private payroll additions were downwardly revised by 38,000 to 157,000.

And after this week’s gloomy data on both the manufacturing and services sides of the economy, the last thing investors wanted to see was a disappointing Labor Department jobs report.

This week, stocks were whipsawed after the Institute of Supply Management released two separate reports showing that both manufacturing and service sector activity fell to multi-year lows in September.

Softness in U.S. manufacturing activity has been well-documented this year amid an ongoing trade war, and has been reflected in hiring trends in goods-producing industries.

Of more concern was the softness reflected in ISM’s report Thursday on the service sector, which comprises a much greater portion of domestic activity and saw growth slow to the lowest level in three years. Within this survey, the employment index fell to a five-year low of 50.4, holding just above the neutral level of 50 to indicate just slight expansion in hiring.

“Prior to yesterday, this would have been viewed as a weak report,” Peter Tchir, head of macro strategy at Academy Securities, wrote in an email Friday of the DOL jobs report. “Now it seems okay relative to what is priced in.”

—

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

Read more from Emily:

• FedEx CEO: ‘Whistling past the graveyard’ on the U.S. consumer belies a broader slowdown

• There won’t be ‘billion-dollar beverage brands’ in the future: Iris Nova CEO

• Coca-Cola products are ‘out of touch with the modern consumer,' founder of Coca-Cola backed beverage co. says

• Iris Nova CEO calls his company the ‘Netflix’ of the beverage space

• Tech companies like Lyft want your money – not ‘your opinion’

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and reddit.

Read the latest stock and stock market news from Yahoo Finance