WASHINGTON - American employers cut back sharply on hiring last month, crushing hopes that the job market was improving and putting more pressure on the Federal Reserve to give the sluggish economy another jolt.
The Labor Department said Friday that employers added just 96,000 jobs in August, down from 141,000 in July and too few to keep up with population growth. The unemployment rate fell to 8.1 percent from 8.3 percent, but only because many people gave up looking for work, so they were no longer counted as unemployed.
The latest numbers were "downright dismal," TD Economics senior economist James Marple said in a description echoed by many others.
The economy remains hobbled in the aftermath of the deepest recession since the 1930s and simply isn't expanding fast enough to spark more hiring. Consumers, whose spending accounts for more than two-thirds of economic activity, have been whittling down debts and spending cautiously. The government reported last week that economic growth clocked a disappointing 1.7 percent annual pace in the April-June quarter.
The economy is expected to grow at an annual rate of around 2 percent for the rest of the year, consistent with only 90,000 new jobs a month.
The disappointing numbers are a blow to President Barack Obama's re-election campaign. Unemployment is down from a peak of 10 percent in October 2009, but no incumbent president since Franklin D. Roosevelt has faced re-election with unemployment higher than 7.8 percent.
Republican presidential challenger Mitt Romney declared that "the weak jobs report is devastating news for American workers and American families ... a harsh indictment of the president's handling of the economy."
Obama said August's hiring was "not good enough" and it's "a long tough journey" to recover from the recession that officially ended more than three years ago.
Despite the bad report, stock prices rose, most likely on expectations the Fed will act next week.
The Dow Jones industrial average rose 14.64 points to 13,306.64. The Standard & Poor's 500 rose 5.80 to 1,437.92.
The job market got off to a strong start this year. Employers added an average 226,000 jobs a month from January through March. But they couldn't sustain that pace, and hiring slowed to a monthly average of 67,000 from April through June.
It looked like things got back on track in July, when the government initially reported 163,000 new jobs, but the Labor Department revised that gain down by 22,000 on Friday.