US employers added a paltry 32,000 workers to payrolls last month, the government said today in a report that was far weaker than expected and unwelcome news for an election-bound President George W. Bush.
The Labor Department also cut its tally of job growth in May and June by a combined 61,000, adding to the report's weak tenor.
Bond markets surged and the dollar tumbled as the data raised questions about how successfully the economy shook off June weakness and led financial market participants to expect a slower pace of interest-rate rises from the Federal Reserve than had been expected.
In one bright spot, the unemployment rate fell to 5.5 per cent last month from 5.6 per cent in June as a separate Labor Department survey of households showed robust employment growth.
The department cautioned, however, that the household survey was a less reliable barometer of month-to-month changes in employment than its larger survey of businesses.
The Bush administration was likely to look on the positive side as the report showed 1.5 million jobs have been created in 11 straight months of hiring gains.
However, Democratic White House hopeful John Kerry could accurately argue that the economy is still down 1.1 million jobs since Bush took office, despite the recent gains.
Fed officials gather next Tuesday to plot interest rate strategy and had widely been expected to add to a quarter-point interest-rate increase made in June.