The US economy shed another 131,000 jobs in July, the second month in a row that jobs have been lost, the Labor Department has said.
The private sector created 71,000 jobs, the government said. However, both figures were worse than expected.
Despite the overall fall in job numbers, the unemployment rate was unchanged at 9.5%.
Many analysts are concerned that high unemployment is undermining the US economic recovery.
The job losses sent US stocks sharply lower, with the Dow Jones index falling 120 points, more than 1%, to 10,555 in early trading.
They also hit European markets, with shares in London, Paris and Frankfurt all falling by about 1%.
The value of the dollar was also hit, falling nearly half a cent against the pound to $1.5983 and three-quarters of a cent against the euro. One euro is now worth $1.3318. BBC News
