The US unemployment rate shot up in August as 84,000 jobs were lost during the month and the figures for June and July were revised upwards by a total of 58,000.
The new figures reinforce the gloomy view of the US economy with 6.1% of the working population in the US is now without a job as employers cut payrolls for an eighth straight month. The total is now the highest in almost five years.
US labour markets are showing signs of accelerating decline and during August there were steep cuts in hiring in nearly every major category of employment. Over 60,000 manufacturing jobs went in August, the most for any month since mid 2003 and 605,000 jobs have disappeared since January.
The figures are a clear recessionary signal for the US central bank, the Federal Reserve, confirming that the world’s largest economy is continuing to weaken. The markets now believe there is a small chance that Fed Chairman Ben Bernanke and his fellow policymakers might cut rates later this year.
Officials at the Fed have predicted that economic activity will slow sharply for the rest of this year before a return to a faster growth rate in 2009.