Job Market Seizes Up

Updated from 8:47 a.m. EDT

The August jobs report produced a shocker Friday -- the economy actually lost 4,000 workers last month as opposed to the gain that had been expected.

Economists had believed that around 100,000 employees had been added to nonfarm payrolls, according to a Bloomberg survey. The unemployment rate remained unchanged from July at 4.6%.

The decline meant the monthly figure was the worst since the summer of 2003.

Additionally, data for the prior two months were revised lower by 81,000 jobs. The Labor Department now says the number of jobs created in July was 68,000, rather than the 92,000 it first reported. June growth went to plus 69,000, down from 126,000.

Following the report, futures traders were pricing in greater odds of a Federal Reserve rate cut at the central bank's Sept. 18 meeting. Stock futures and the dollar dropped. The two-year and 10-year Treasury securities declined in price, and gold rose.

The government said employment in manufacturing, construction and local government education fell last month, while job growth continued in health care and food services.

Manufacturing lost 46,000 jobs and has now shed 215,000 workers over the past year. The construction sector surrendered 22,000 jobs, with the bulk of the loss occurring among residential specialty trade contractors, a byproduct of the slowdown in housing.

Since its most recent peak in September 2006, construction employment has fallen by 96,000, the report said.