US jobs growth disappoints as recovery falters

The US economy added fewer jobs than expected in August as employment rose by 235,000.

The figure was well down on the 1.05 million jobs created in July, adding to fears that the recovery from the pandemic may be running out of steam.

Despite the disappointing hiring levels, the unemployment rate declined to 5.2% in August from 5.4% the previous month.

The dollar fell on foreign exchange markets after the announcement.

"The staggering weakening we've seen in August's labour activity is a sign that the Delta variant is having a hugely damaging impact, which will in turn hit growth and confidence," said Robert Alster of Close Brothers Asset Management.

"But conversely, strong labour data - as seen in June and July's non-farm payrolls - would push the [Federal Reserve] towards a more hawkish approach to monetary policy, with a tapering of asset purchases as soon as November and a rate rise in 2022.

"This runs the risk of stifling US growth before it has had a chance to bed in," he added.