MercoPress. South Atlantic News Agency

Employment in US down; fears about strength of economic recovery

Unease over health of the economy is weighing on President Obama's popularity

Employment in the United States fell for a second straight month in July as more temporary census jobs ended while private hiring rose less than expected, pointing to an anaemic economic recovery.

Non-farm payrolls fell 131,000 the US Labour Department said as temporary jobs to conduct the decennial census dropped by 143,000.

Private employment, considered a better gauge of labour market health, rose 71,000 after increasing 31,000 in June. In addition, the government revised payrolls for May and June to show 97,000 fewer jobs than previously reported.

The US unemployment rate was unchanged at 9.5% in July for a second straight month, just below market expectations for a rise to 9.6%. The steady jobless rate largely reflected a drop in the labour force as discouraged workers gave up the search for jobs.

Job growth has taken a step back after fairly strong gains between February and April, putting in jeopardy the economy's recovery from its worst downturn since the 1930s.

Growing unease over the health of the economy is weighing on President Barack Obama's popularity and hurting the Democratic Party's prospects of keeping control of Congress in November's mid-term elections.

The job losses sent US stocks sharply lower, with the Dow Jones index falling more than 1% in early trading, though the market later recovered slightly to close down 0.2% at 10653.56 points.

They also hit European markets, with shares in London, Paris and Frankfurt ending the day down between 0.6% and 1.3%.

The value of the dollar was also hit, falling nearly half a cent against the pound to $1.5983 and nearly a cent against the euro. One euro is now worth $1.3284.