US job growth grinds to a halt

Government report shows no net jobs were created in August, keeping nation's unemployment rate locked at 9.1 per cent.

     The grim report raises fears of recession and political turmoil over the government's debt and deficit [GALLO/GETTY]

    US employment growth ground to a halt in August as sagging confidence discouraged businesses from hiring, piling pressure on the Federal Reserve to provide more stimulus to aid the economy.

    Nonfarm payrolls were unchanged last month, the Labour Department said on Friday, while employers created a combined 58,000 fewer jobs than had been thought in June and July.

    The grim report fuelled recession fears. Prices for US stocks and oil fell, while US government debt prices rose as traders bet on a further easing of monetary policy.

    "The economy is slowly grinding to a halt," said Steve Blitz, a senior economist for ITG Investment Research in New York.

    Obama pressure

    The report was the weakest reading on jobs in nearly a year and far below the 75,000 job gain Wall Street had expected.

    The unemployment rate, however, held at 9.1 per cent as a survey of households found both job growth and an expanding labour force.

    FROM THE BLOGS
    Obama faces toughest challenge yet
    By Alan Fisher in The 
    Americas Blog

    With the jobless rate stuck above 9 per cent and confidence falling, US President Barack Obama faces pressure to come up with ways to spur job creation.

    The health of the labour market could determine whether he wins re-election next year.
       
    Obama will lay out a new jobs plan in a speech to the nation on Thursday.
       
    "This better be one hell of a speech next week," said Sal Arnuk, the co-manager of trading at Themis Trading in Chatham, New Jersey.
        
    Friday's data, which pushed the Standard & Poor's 500 stock index down by two per cent in early trading, could strengthen the hand of officials at the US central bank who were ready at their August meeting to do more to help the sputtering economy.

    The Federal Reserve's next meeting is a two-day gathering, scheduled for September 20-21.
       
    The US central bank cut overnight interest rates to near zero in December 2008 and it has bought $2.3tn in securities in two bouts of bond buying, known as quantitative easing, or QE.

    Many analysts say its arsenal is now largely depleted, although expectations grew on Friday of further action.

    Shedding jobs
       
    "The Fed[eral Reserve] has gained greater political ability to enact a version of QE3 at their meeting in September," said Douglas Borthwick, the managing director at Faros Trading in Stamford, Connecticut.
     
    The economy needs to generate 150,000 jobs or so each month just to keep the unemployment rate steady over time.
       
    Still adding jobs were the healthcare sector, by 30,000, mining and professional and business services.

    A decline in information employment reflected industrial action in the telecommmunications industry, the department said, referring to a two-week strike against Verizon Communications by about 45,000 employees.

    Government departments continued to shed jobs, even after accounting for about 22,000 workers from a partial state government shutdown in Minnesota, the department said.

    Since employment peaked in September 2008, local government departments have shed 550,000 jobs.

    SOURCE: Agencies


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