The US unemployment rate hit a four-year high in July as employers shed jobs for a seventh straight month amid economic uncertainty, a Labour Department survey showed.
The government's monthly employment snapshot revealed that employers cut 51,000 jobs last month, but the report was not as bad as feared as most economists had predicted 75,000 jobs lost.
The national unemployment rate meanwhile ticked up to 5.7 per cent from 5.5 per cent in June, a shade higher than most forecasts.
Employers cut jobs as the world's largest economy continues to be buffeted by a nagging housing market slump, a widespread credit crunch and high crude oil prices.
"We're not seeing the level of layoffs you tend to see in a recession at this point. What we are really tending to see is a lack of new hiring," said Scott Anderson, an economist at Wells Fargo.
The economic slowdown and rising fuel costs have had a big impact on major airlines and automakers who have been forced to slash costs by shedding workers this year.
Northwest Airlines announced it would be slashing 2,500 jobs last month while automaker Chrysler said it planned to cut 1,000 white-collar posts by the end of September.
June's job losses were revised down to 51,000 posts compared with an original estimate of 62,000, while May's employment cuts were notched back to 47,000 from an original tally of 62,000.
A total 463,000 jobs have been lost in the economy since the start of the year.
The bleak job snapshot was released ahead of a looming interest rate meeting of the Federal Reserve set for Tuesday. The central bank is widely expected to keep its federal funds rate firmly anchored at 2 per cent.