US employers cut 4,000 jobs in August, the first time in four years that monthly hiring contracted, the government said today.
A worker in a crab factory on the Florida Keys
The surprisingly bleak August jobs report was sharply contrary to expectations that hiring would keep rising and comes even before the worst of the credit-market turmoil has begun to have an impact on the economy.
Many financial services firms hit by subprime mortgage problems already have begun to announce layoffs.
The last time the economy shed jobs was in August 2003, when 42,000 non-farm jobs were cut.
In addition to the August job losses, the Labor Department revised down its estimates for hiring in June and July by a total of 81,000. It said 68,000 jobs were added in July rather than 92,000 and 69,000 in June instead of 126,000.
Despite the job losses in August, the unemployment rate that is compiled from a separate survey was unchanged from July at 4.6 per cent. It has held in a range from 4.4 per cent to 4.6 per cent since last September.
The Federal Reserve's policy-making Federal Open Market Committee is scheduled to meet on September 18th, but the bad jobs report is likely to heighten speculation it could lower interest rates even before then.
Stock futures prices plunged after the weak jobs data was issued, and the dollar's value dropped against other major currencies on the evidence that a US housing slump and credit problems might be damaging the broader economy.