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US jobs data shows surprise fall US jobs data shows surprise fall
(41 minutes later)
US employers have cut back on jobs for the first time in four years, Labor Department figures for August reveal.US employers have cut back on jobs for the first time in four years, Labor Department figures for August reveal.
The Department of Labor said 4,000 jobs were cut in August, although the unemployment rate is unchanged at 4.6%. The Department of Labor said 4,000 jobs were cut in August, prompting the Dow Jones index to fall by 141 points in opening Friday trading in New York.
The statistics fly in the face of hopes that employers would continue to hire new workers, and suggest that recent market turmoil is already hitting jobs. Market alarm spread because economists had anticipated data showing an increase of 110,000 jobs.
The figures are alarming because US economists had anticipated data showing an increase of 110,000 jobs. The statistics undermined those hopes and confirmed that recent market turmoil is hitting jobs.
Financial services firms are already laying off staff in the wake of the sub-prime mortgage debacle.Financial services firms are already laying off staff in the wake of the sub-prime mortgage debacle.
Hirings falterHirings falter
The Department of Labor also cut its estimates for the number of new employees hired in June and July by a total of 81,000.The Department of Labor also cut its estimates for the number of new employees hired in June and July by a total of 81,000.
It's dreadful...it seems to me almost inevitable we're heading for recession Analyst Michael MetzIt's dreadful...it seems to me almost inevitable we're heading for recession Analyst Michael Metz
The last time the US economy shed jobs was in August 2003 when the total number employed fell by 42,000.The last time the US economy shed jobs was in August 2003 when the total number employed fell by 42,000.
The figures come in the wake of former Federal Reserve Bank boss Alan Greenspan comparing current market conditions to those preceding earlier crashes.The figures come in the wake of former Federal Reserve Bank boss Alan Greenspan comparing current market conditions to those preceding earlier crashes.
Michael Metz, chief investment strategist at Oppenheimer & Co in New York, reacted to the latest employment figures with gloom.Michael Metz, chief investment strategist at Oppenheimer & Co in New York, reacted to the latest employment figures with gloom.
"It's dreadful...it seems to me almost inevitable we're heading for recession", Mr Metz said."It's dreadful...it seems to me almost inevitable we're heading for recession", Mr Metz said.
The figures will add to pressure on the Federal Reserve to lower interest rates.The figures will add to pressure on the Federal Reserve to lower interest rates.
Fed chairman Ben Bernanke has stated that he is prepared to act to prevent credit difficulties sparked by the sub-prime crisis from damaging the US economy.Fed chairman Ben Bernanke has stated that he is prepared to act to prevent credit difficulties sparked by the sub-prime crisis from damaging the US economy.