The unemployment rate fell more than expected because of fewer people in the workforce.
It's important to note that these estimates are quite soft. The BLS points out that the "confidence level" is plus or minus 105,000. That means the "real" number of new jobs created in August was not 173,000 but fell in a range between 68,000 and 278,000. That range explains why every month the BLS revises numbers from the two previous months as a result of having better information. This month, the BLS revised its originally reported June job numbers from 231,000 to 245,000 and July numbers from 215,000 also to 245,000. The number of people officially unemployed fell to 8.03 million.
The official unemployment rate—in BLS jargon U3—fell to 5.1 percent. The bureau also estimates unemployment and underemployment each month under the label of U6. This includes people with no job at all, part-time workers who want full-time jobs but can't find one, and many "discouraged" workers. That fell in August 0.1 to 10.3 percent.
The civilian workforce dropped 41,000, after having risen 69,000 in July. The employment-population ratio rose slightly to 59.4 percent, and labor force participation was unchanged at 62.6 percent.
Another measurement the BLS makes each month is the job situation for Americans aged 25-54, people in their "prime working years." The employment-population ratio for that group reached a high point of 81.9 percent in April 2000. By the time the Great Recession officially began in December 2007, it had fallen to 79.7 percent, hitting bottom at 74.8 percent in November 2010. The rate has been rising slowly ever since. In August, it rose from 77.1 percent to 77.2 percent.
Hourly earnings have risen 2.2 percent over the past year.