The U.S. economy failed to add jobs for the first time in almost a year, while the unemployment rate was stuck at 9.1%, putting pressure on policy makers to revive a moribund labour market.
Nonfarm payrolls were unchanged last month -- the worst result since a small decline in September 2010 -- as the government sector continued to shed jobs, the U.S. Labor Department said Friday. The private sector added only 17,000 jobs.
About 45,000 telecom jobs were off company payrolls because of a strike at Verizon Communications Inc., contributing to the worst private-sector performance since Feb. 2010. But payrolls were weak even without the one-off Verizon impact.
Data for the previous two months were revised down by a total 58,000 to show payroll increases of 85,000 jobs in July and only 20,000 in June, the government report showed.
The unemployment rate, which is obtained from a separate household survey, was unchanged at 9.1% last month. About 14 million Americans who would like to work can't get a job.
The results were worse than expected. Economists surveyed by Dow Jones Newswires had forecast payrolls would rise by 80,000 last month, with the unemployment rate unchanged.
President Barack Obama is due to unveil new measures Thursday aimed at resuscitating the jobs market, but budget constraints and sharp divisions between Democrats and Republicans make it unlikely that Congress will pass a substantive package.
The Federal Reserve may therefore end up taking new steps to try and spur growth. The economy slowed sharply in the first half, heightening concerns it could fall back into recession only two years after the end of the severe downturn of 2008 and 2009.
In Friday's report, several major industries showed weakness beyond the 48,000 employment decline in the information industry, which includes telecom jobs.
Manufacturing, a big creator of jobs for most of the recovery, saw employment decline by 3,000 in August. The battered construction sector showed 5,000 job losses last month. The housing sector remains a big drag on the economy. The retail sector lost nearly 8,000 jobs.
Meanwhile, government employment continued to fall -- by 17,000 -- for the 10th month in a row. Government jobs are expected to continue struggling as administrations try to cut the huge budget gaps accumulated to fight the recession.
Facing re-election in just over a year, Mr. Obama is next week expected to call for more investments in the country's creaking infrastructure and a possible extension to the 2011 payroll-tax credit to boost consumer spending. But Republican opposition to more spending makes the president's job harder. The White House Thursday downgraded its outlook for the economy, saying unemployment could still be at 9% in 2012.
Fed Chairman Ben Bernanke a week ago said the nation's challenges -- including long-term unemployment and weakness in housing -- are largely beyond the central bank's control, indicating it's mainly up to Mr. Obama and Congress to fix the economy. Even so, the Fed is likely to step in if it feels the economy is at risk because of government paralysis. Some officials signaled readiness to enact a third round of the Fed's controversial asset purchases at their latest meeting Aug. 9.
The jobs report Friday showed 42.9% of unemployed Americans, or six million people, were out of work for more than six months. The longer someone is without a job, the harder it is to find work.
A broader measure of the unemployment rate, which includes people who stopped looking for work and those settling for part-time jobs, rose to 16.2% in August from 16.1% the previous month.
The report also showed that Americans' incomes, which are crucial to fuel the spending needed to boost the economy, dropped. Average hourly earnings of all employees fell by $0.03 to $23.09 U.S. Over the past year, earnings have increased by only 1.9%.
