US August non-farm payrolls down 4,000, first drop in four years

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US employers in August unexpectedly posted their first monthly payroll decline in four years as manufacturing and construction workers both posted sharp declines, the Labor Department said today.

The economy lost 4,000 jobs in August, an unexpected loss compared with the 118,000 increase economists polled by Thomson s IFR Markets had expected. The August decline is the first drop in non-farm payrolls since August 2003.

The unemployment rate, taken from a separate survey of households, remained steady at 4.6 pct.

In June and July, the number of jobs added was revised sharply down by 81,000 to a cumulative total of 137,000.

The weakness stemmed from a sharp drop in manufacturing and construction jobs. Manufacturing jobs fell 46,000 while construction jobs fell 22,000 in August. That s the largest drop in factory jobs since July 2003.

The service sector added just 60,000 jobs in August, the smallest addition to the largest sector of the economy since October 2005. Retail jobs rose 13,000 in the month.

Average hourly wages rose 0.3 pct in August, in line with expectations.

Still, average hourly earnings have risen 3.9 pct in the past year, matching July s rise.

The average workweek remained at 33.8 hours in August.

The labor force participation rate, which includes the number of working aged people with jobs, fell slightly to 65.8 pct. The official unemployment rate only includes workers who are actively seeking a job.

That s the lowest labor force participation rate since May 1988.