Official figures show that US employment rose by far less than expected in May to record its weakest reading since September, while the jobless rate rose to 9.1%.
This came as high energy prices and the effects of Japan's earthquake bogged down the US economy.
Employment increased by 54,000 last month, the Labor Department said. This was well below economists' expectations for a 150,000 increase.
Private employment rose by 83,000, the smallest increase since June. Government employment dropped 29,000.
The US government also revised employment figures for March and April to show 39,000 fewer jobs created than previously estimated.
The job creation slowdown confirmed the economic weakness already flagged by other data from consumer spending to manufacturing. It could stoke fears about the depth and duration of a slowdown that started early in the year.
The Labor Department said severe weather last month, including tornadoes and flooding in some areas, did not materially affect data collection. Economists still believe the lull in activity will be temporary. They cite high petrol prices, bad weather and disruptions to car production because of a shortage of parts from Japan as factors affecting growth.
The report provides one of the best early reads on the health of the US economy and it regularly sets the tone for global financial markets.
The US economy has regained only a fraction of the more than eight million jobs lost during the recession. Economists say payrolls growth above 300,000 a month is needed to make significant progress in shrinking the pool of 13.9 million unemployed Americans.
The unemployment rate rose to 9.1% last month from 9% in April as some discouraged workers who had been inspired by the pick-up in hiring in April re-entered the labour market.
The employment report showed weakness across the board, with the private services sector adding 80,000 jobs last month after increasing by 213,000 in April. Retail employment, which recorded its largest increase in 10 years in April, fell 8,500 last month. Manufacturing employment fell 5,000 last month, while construction employment rose 2,000.
Brighter news from US services sector
A separate report showed that the pace of growth in the US services sector picked up modestly in May after a sharp drop in the previous month.
The Institute for Supply Management said its services sector index rose to 54.6 last month from 52.8 in April. The May figure was just above economists' forecasts for 54.
The bounce came after April's reading fell to the lowest level since August 2010. Any figure above 50 indicates expansion in the sector.
