US employment growth ground to a halt in June, with employers hiring the fewest number of workers in nine months, dampening hopes the economy was on the cusp of regaining momentum after stumbling in recent months. Stock markets fell sharply after the news.
Non-farm payrolls rose only 18,000, the weakest reading since September, the Labor Department said, well below most economists' expectations for a 90,000 rise.
Many economists raised their forecasts yesterday after a stronger-than-expected reading on US private hiring from payrolls processor ADP, and some expected gains of anywhere between 125,000 and 175,000.
US president Barack Obama has said the impasse over the US debt limit was contributing to the economy's weakness by adding to business uncertainty.
Obama cited the debt limit dispute, along with the crisis in Greece, as among factors making companies more hesitant to hire and invest.
Obama said the poor jobs report 'confirms what most Americans already know,' that the recovery from what he described as the 'worst downturn in our lifetimes' was slow and painful, and that it was vital to get the economy on a sounder footing.
'Our economy as a whole just isn't producing nearly enough jobs for everybody who's looking,' Obama said in brief comments at the White House.
'We still have a long way to go and a lot of work to do to give people the security and the opportunity they deserve,' he added.
'We have added more than 2m private-sector jobs in the past 16 months, but the recession cost us more than 8m, and that means that we still have a big hole to fill.'
The unemployment rate climbed to 9.2%, the highest since December, from 9.1% in May.
The US government revised April and May figures to show 44,000 fewer jobs created than previously reported.
The report shattered expectations that the US economy was starting to accelerate after a soft patch in the first half of the year.
The private sector added 57,000 jobs, accounting for all the jobs created, with government employment shrinking 39,000 because of fiscal problems at local and state governments.
Economic activity in the first six months of the year was dampened by rising commodity prices and supply chain disruptions following Japan's devastating earthquake in March.
Signs the labour market is struggling are a major blow for the Obama administration, which has struggled to get the economy to create enough jobs to absorb the 14.1 million unemployed Americans.
The economy is the top concern among voters and will feature prominently Obama's bid for re-election next year.
So far, the economy has regained only a fraction of the more than 8 million jobs lost during the recession.
At the same time, the Federal Reserve - which wrapped up a $600 billion bond-buying programme last week designed to spur lending and stimulate growth - appears unlikely to take any further steps to boost the economy.
The economy needs to create between 125,000 and 150,000 new jobs a month just to absorb new labour force entrants.
Details of the report showed widespread weakness, though factory payrolls rebounded 6,000 after contracting in May for the first time in seven months, with the recovery reflecting a step-up in motor vehicle production.
Construction employment fell 9,000 last month after declining 4,000 in May.
Government employment declined for an eighth straight month as municipalities and state governments continued to wield the axe to balance their budgets.
The report also showed the average workweek fell to 34.3 hours from 34.4 hours.
Employers have been reluctant to extend hours because of the uncertainty surrounding the recovery.
Average hourly earnings slipped, more evidence that wage-driven inflation is not a risk.
