US employers cut jobs in August at the fastest pace since March, the government said in a report today.
The number of workers on US payrolls slid by 93,000 in August, far worse than the increase of 12,000 expected by economists.
A recent string of better-than-expected data had led economists to believe the tough labour market might be starting to improve.
The unemployment rate fell, but only to 6.1 per cent from 6.2 per cent in the previous month. Analysts had expected the unemployment rate, which is taken from a separate survey of households, to be steady at 6.2 per cent.
The US economy shed jobs in a wide range of sectors. Manufacturing jobs fell 44,000, the 37th straight month of decline while service jobs tumbled 67,000.
The dollar weakened sharply against other currencies after the report while US Treasury bonds rose. This report supports comments from Federal Reserve officials saying that interest rates are likely to be kept low for some time.
Yesterday, Fed Governor Mr Ben Bernanke, speaking in New York, dubbed this economic recovery the "job-loss" recovery, noting that job losses have been much greater than the "jobless" recovery after the 1991 recession.
The Fed is next due to meet to discuss interest rates on September 16th.