WASHINGTON — Total payrolls were unchanged in August, an alarming setback for an economy that has struggled to grow and might be at risk of another recession.
In August, the private sector added 17,000 jobs, the fewest since February 2010. That was offset by a loss of 17,000 jobs in the government sector.
The government also reported that the unemployment rate remained at 9.1 percent. It was the weakest jobs report since September 2010.
The weakness in employment was underscored by revisions to the jobs data for June and July. Collectively, those figures were lowered to show 58,000 fewer jobs added. The downward revisions were all in government jobs.
“Underlying job growth needs to improve immediately in order to avoid a recession,” said HSBC economist Ryan Wang.
Weak growth, Standard & Poor’s downgrade of long-term U.S. debt in early August and a sell-off on Wall Street likely kept some businesses from hiring.
As bad as Friday’s jobs report was, it contained anomalies. The jobs total was skewed by a drop of 48,000 in the information sector, most in telecommunications. Some 45,000 striking Verizon workers were not counted on payrolls during August, BLS said.
That’s important because private-sector employers added 17,000 jobs during August. That number is likely to rise in September because the Verizon strike is over.
The August figures are bad news for President Barack Obama, with the economy expected to be the top issue when he runs for re-election next year.
Obama will introduce a plan for creating jobs and boosting economic growth in a rare address to a joint session of Congress next week. He is expected to call for more investments in the country’s infrastructure and a possible extension to the 2011 payroll-tax credit to boost consumer spending.
But with a deep partisan rift in Washington, Obama’s proposals on more spending are likely to face stiff opposition in the Republican-led House of Representatives.
On Friday, Obama took a step toward winning Republican support. He directed the Environmental Protection Agency to abandon rules that would have tightened health-based standards for smog. Congressional Republicans and some business leaders have objected to the proposed rules, saying they would have cost jobs.
“The stagnation in U.S. payroll employment is an ominous sign,” said Paul Ashworth, an economist at Capital Economics. “The broad message is that even if the U.S. economy doesn’t start to contract again, any expansion is going to be very, very modest and fall well short of what would be needed to drive the still elevated unemployment rate lower.”
The economy needs to add roughly 250,000 jobs a month to rapidly bring down the unemployment rate, which has been above 9 percent in all but two months since May 2009.
The Obama administration has estimated that unemployment will average about 9 percent next year. The rate was 7.8 percent when Obama took office.
The White House Office of Management and Budget projects overall economic growth of only 1.7 percent this year.
The anemic job report has increased chances that the Federal Reserve will announce at its September meeting that it will start buying bonds to support the economy, said Kathy Lien of GFT brokerage.
Buying bonds could drive interest rates lower, promoting borrowing and spending, but lower rates tend to weigh on a currency because investors seek bigger returns elsewhere.
Hiring fell across many different sectors in August and the average work week also declined and hourly earnings fell by 3 cents to $23.09.
With job creation stalled and wages declining, consumers won’t see much gain in incomes. That will limit their ability to spend, which undercuts growth. Consumer spending accounts for about 70 percent of the economy.
Manufacturers cut 3,000 jobs in August, its first decline since October 2010. Construction companies, 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 in the first six months of the year. That was the slowest six months of growth since the recession officially ended in June 2009.
In August, consumer confidence fell to its lowest level since April 2009, according to the Conference Board.
Most economists forecast that growth may improve to about a 2 percent annual rate in the July-September quarter. But that’s not fast enough to generate many jobs.
“The economy continues to stagger,” said Sung Won Sohn, economist at California State University Channel Islands. “It wouldn’t take much (of a) shock to tip it onto a recession.”