The US economy created no jobs and the unemployment rate held steadily higher at 9.1 percent in August, fueling concerns that the US is heading for another recession.
It was the first time since World War II that the economy had precisely net zero jobs created for a month.
Economists had been expecting the report to show a net of 75,000 jobs created, an unusually low number considering the US is technically more than two years removed from the end of the last recession .
Stocks sold off sharplyfollowing the report, while bond prices rose and the US dollar fell nearly 2 percent against the Swiss franc.
Markets had been closely watching the August report in hopes that the employment picture would begin to show signs of recovery.
Stocks have slumped more than 10 percent since the beginning of May as concerns grew that the debt and deficit problem was beginning to overwhelm hopes of a recovery following the depths of the financial crisis in 2008 and 2009.
Private payrolls actually rose 17,000, but that was offset by continued shrinkage in government. The number of people unemployed remained unchanged at 14 million.
It was a dismal way to kick off the Labor Day weekend when Americans are supposed to be celebrating work, not bemoaning the lack of it.
"We're in this very flattish-type phase," said Liz Ann Sonders, chief investment strategist at Charles Schwab in San Francisco. "The only relatively good news, and I would emphasize 'relatively,' is we're not in firing mode, not in a job-loss mode. We're in an extraordinarily slow job-gain mode."
The unemployment rate that counts those not looking for work rose to 16.2 percent, tied for the highest in 2011.
The numbers could have been even worse.
The government's birth-death model, which approximates the amount of businesses created and lost during the month, added 87,000 jobs.
The average duration of unemployment edged lower to 40.3 weeks from its previous record high of 40.4 weeks in July. However, the median level spiked from 21.2 to 21.8 weeks.
Among the more disturbing numbers: the amount of people "marginally attached to the labor force" rose to 2.6 million from 2.4 million. These are workers not included in the unemployment count because they had not sought work in the past four weeks but have looked in the past year.
Health care and mining saw more jobs in the month, but telecommunications and government both posted substantial losses. It was unclear how much impact the Verizon strike, where 45,000 walked off their jobs for two weeks, had on the total count. Many of those workers likely received paychecks during the Labor Department's counting period and may not be included in the number released Friday.
Manufacturing lost 3,000 jobs, construction dropped 5,000 and retail lost 8,000.
President Obama is set to deliver a speech to Congress on Thursday that will outline the administration's jobs planas the 2012 election nears.
"There are things that we know work that are waiting for action by the Congress," US Secretary of Labor Hilda Solis told CNBC.
"I do believe that we're going in the right direction, but we need cooperation and it begins with members of the House and the Senate agreeing to do something now," she added.
At the same time, the Federal Reserve has expanded its balance sheet past the $2.5 trillion mark through monetary easing measures geared at boosting spending.
However, the economy remains mired at 1 percent growth, and a report this week showed manufacturing edging towards contraction levels.
"Jobs creation remains weak, because temporary tax cuts, stimulus spending, large federal deficits, expensive and ineffective business regulations, and increased health care mandates and costs do not address structural problems holding back dynamic growth and jobs creation—the huge trade deficit and dysfunctional energy policies," Peter Morici, economist at the University of Maryland, said in an analysis.
The report also showed that job creation in July, which originally came in better than expected, actually wasn't as good as thought. The 117,000 jobs originally announced was cut to 85,000, while June's number fell from 46,000 to a mere 20,000. That makes four consecutive months of sub-100,000 job growth when most economists believe that 150,000 is the minimum number needed to reduce the unemployment rate meaningfully.
"Though much attention is being paid to ‘zero job growth’ in August, the real news in today’s numbers is that job growth is worse than in recent months, and the nation continues to produce far fewer jobs than needed to meaningfully reduce the unemployment rate," Heidi Shierholz, economist at the Economic Policy Institute in Washington, D.C., said in a statement. "In fact, in some ways the report was less than zero in that weekly hours fell, as did hourly earnings."
Average hourly earnings slid 3 cents to $23.09 while average weekly hours edged lower to 34.2.
Unemployment rates held steady across the major categories, with whites at 8.9 percent, Hispanics at 11.3 percent and blacks at 16.7 percent. The rate for women is a comparatively low 8.0 percent.
There were 331,000 more people working in August than July. But 430,000 more were in the category of working part-time for economic reasons.