The U.S. economy effectively created no new jobs in August, stunning economists who had been expecting at least 80,000 new positions to be created.
In truth, 17,000 private sector jobs were created during the month, the Bureau of Labor Statistics said Friday. But that figure was completely offset by 17,000 public sector jobs lost as all branches of the U.S. government begin to tighten their belts.
It's the first time since February 1945 that the government has reported a net job change of zero.
Economists say the U.S. economy needs at least 250,000 new jobs per month in order to start making a dent in the country's 9.1 per cent unemployment rate. The U.S. economy has only created a little more than 150,000 in the last four months combined.
"The stagnation in U.S. payroll employment is an ominous sign," said Paul Ashworth, chief U.S. economist at Capital Markets.
The unemployment rate stayed at the same level in August since the labour force stayed the same size too. Officially, the U.S. labour force remained steady at 131.1 million.
Average hourly earnings lost three cents to $23.09, the bureau said.
Reaction to the news was swift, as the Dow lost more than 200 points. Gold gained $40 to $1,870 an ounce.
"The disappointing August jobs figure raises a downside risk to the growth outlook and opens the door slightly further [to more stimulus]," BMO economist Sal Guatieri said. "It could also increase pressure on the Republican-led House to approve of the president’s economic and job-creation proposals."