U.S. Adds Zero Jobs in Rough August

The stuttering U.S. economy added no jobs in August amid recession fears and political turmoil over the government's finances, bleak official data showed Friday.

Employment in the private sector, previously the main engine for job growth as revenue-strapped governments shed workers, "changed little" in most major industries, the Labor Department said.

A meager 17,000 private-sector jobs were added, down from a revised 156,000 in July. But that was offset by 17,000 jobs shed by government.

"The job machine has ground to a halt," said Joel Naroff at Naroff Economic Advisors.

It was the first time in 10 months the world's largest economy has not produced net growth in nonfarm payrolls.

"The problem doesn't seem to be an upsurge in firings, since initial unemployment claims have not climbed, but a lack of hiring, resulting from a lack of growth in demand and huge policy uncertainty," said Nigel Gault, chief U.S. economist at IHS Global Insight.

"The extreme uncertainty over the outcome of the debt-ceiling debate probably did extra damage to the August figures," he added.

The Labor Department said the unemployment rate remained unchanged at 9.1 percent from July. It was the 28th month the jobless rate has been at 9.0 percent and above, except for two.

The number of unemployed people was essentially unchanged, at 14 million.

The jobs data for August were the worst since September 2010, when the economy destroyed more than twice the number of jobs it created. The pace of job growth remains far below the numbers needed to reduce the high unemployment rate.

"Wrangling in Congress and the eventual deficit deal underscored the inability of government to jump-start the labor market. Employers and consumers have lost confidence in the economy," said Sophia Koropecky at Moody's Analytics.

The report came amid political gridlock in Washington, as President Barack Obama's Democrats and their Republican foes battle over how to achieve long-term deficit reduction.

Confidence in the economy has taken a sharp hit as Americans watched politicians strike an 11th hour deal on August 2 to avert a sovereign debt default and Standard & Poor's downgraded the triple-A U.S. credit rating for the first time in history.

The August employment data came ahead of Obama's much-awaited speech to a joint session of Congress next Thursday, in which he will lay out a plan to create jobs and stimulate the moribund economy, where growth fell below one percent in the first half of the year.

The 9.1 percent jobless rate is "a level that remains unacceptably high," Katharine Abraham, a member of the president's Council of Economic Advisors, said in a White House blog post.

Obama left the White House for a weekend at Camp David without commenting either on camera or on paper about the jobs number. He is due to give a speech on the economy on Monday, the Labor Day holiday, in the distressed hub of the auto industry, Detroit.

The Republican leader of the House of Representatives, John Boehner, blamed Washington policies for creating "a fog of uncertainty that's left small businesses unable to hire and American families worried about the future."

After a series of weak economic data, analysts on average estimated 70,000 payrolls, with the jobless rate unchanged.

Other data in the August report were also weaker. The department sharply lowered its net new jobs for numbers June and July by a combined 58,000, and the average workweek and hourly earnings in the private sector declined.

Sectors still adding jobs in August were health-care, by 30,000, mining and professional and business services.

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

Governments continued to downsize their workforces, even after accounting for the return of about 22,000 workers from a partial state government shutdown in Minnesota, the department said.

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