US stocks have slumped on renewed fears for the economy’s prospects after grim employment data showed zero job creation in the 400m-strong country in August.
Official non-farm payroll data showed the US economy added no net new jobs in August, far below analyst expectations for an extra 70,000 jobs.
The news sent the Dow down 1.8 per cent to 11,286.65; the Nasdaq composite index down 2.3 per cent to 2,486.73; and the S&P 500 down 2.1 per cemt tp 1,178.48.
In London, the blue-chip FTSE 100 index dropped 55 points to 5,284 on the news and closed down 2.3 per cent for the day, at 5,292.03.
The worse than expected August figure was compounded by a downward revision to July’s data, to just 85,000 jobs added from 117,000 previously reported.
June’s figure was also revised down to 20,000 from 45,000. The unemployment rate remained unchanged in August at 9.1 per cent.
August’s jobs data was partly hit by a 45,000-strong strike at telecoms giant Verizon over changes to contractual benefits and pension contributions.
But it showed the world’s biggest economy had effectively ground to a halt, raising the spectre of a return to recession later this year.
“This afternoon’s release is likely to reignite volatility across global markets as it implies the US recovery has still failed to gain a strong foothold, despite the recession ending two years ago,” said Scott Corfe, an economist at the Centre for Economics and Business Research.
Traders said all eyes were now on whether the Federal Reserve would announce a new round of quantitive easing to foster more growth.
“This report raises renewed fears of a double-dip recession in the US and the prospect of further Fed stimulus measures with the market now factoring in the prospect of action at the next meeting in September,” said CMC markets analyst Michael Hewson.