Employers add no net jobs in Aug.; rate unchanged

(AP) - U.S. employers stopped adding jobs in August,an alarming setback for an economy that has struggled to grow andmight be at risk of another

WASHINGTON - (AP) - U.S. employers stopped adding jobs in August,an alarming setback for an economy that has struggled to grow andmight be at risk of another recession.

The government also reported that the unemployment rate remainedat 9.1 percent. It was the weakest jobs report since September2010.

Stocks tumbled on the news. The Dow Jones industrial averagesank 245 points soon after trading began.

The new figures are bad news for President Barack Obama, withthe economy expected to be the top issue when he runs forre-election next year.

Obama will introduce a plan for creating jobs and boostingeconomic growth in a rare address to a joint session of Congressnext week. But with a deep partisan rift in Washington, Obama'sproposals are likely to face stiff opposition in the Republican-ledHouse of Representatives.

"The stagnation in U.S. payroll employment is an ominoussign," said Paul Ashworth, an economist at Capital Economics.

"The broad message is that even if the U.S. economy doesn't startto contract again, any expansion is going to be very, very modestand fall well short of what would be needed to drive the stillelevated unemployment rate lower."

The Obama administration has estimated that unemployment willaverage about 9 percent next year. The rate was 7.8 percent whenObama took office.

The White House Office of Management and Budget projects overallgrowth of only 1.7 percent this year.

The weakness in employment was underscored by revisions to thejobs data for June and July. Collectively, those figures werelowered to show 58,000 fewer jobs added. The downward revisionswere all in government jobs.

The average work week also declined and hourly earnings fell by3 cents to $23.09.

Weak growth, Standard & Poor's downgrade of long-term U.S. debtin early August and a sell-off on Wall Street likely kept somebusinesses from hiring.

With job creation stalled and wages declining, consumers won'tsee much gain in incomes. That will limit their ability to spend,which undercuts growth. Consumer spending accounts for about 70percent of the economy.

The economy needs to add roughly 250,000 jobs a month to rapidlybring down the unemployment rate, which has been above 9 percent inall but two months since May 2009.

In August, the private sector added 17,000 jobs, the fewestsince February 2010. That compares with 156,000 in July and 75,000in June.

Hiring fell across many different sectors. Manufacturers cut3,000 jobs, its first decline since October 2010. Constructioncompanies, retailers, and transportation firms also cut workers.

The health care industry added 30,000 jobs last month.

The economy expanded at an annual pace of only 0.7 percent inthe first six months of the year. That was the slowest six monthsof growth since the recession officially ended in June 2009.

In August, consumer confidence fell to its lowest level sinceApril 2009, according to the Conference Board.

Most economists forecast that growth may improve to about a 2percent annual rate in the July-September quarter. But that's notfast enough to generate many jobs.

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