In a further discouraging sign of the pace of economic growth, the national unemployment rate rose to its highest level since the start of the year.

The 4.6% unemployment rate in July was the highest since a similar 4.6% rate in January.

In addition, for the first time in 18 months the government cut hiring.

The disappointing figures will not help ease the worries over the outlook for the economy, prompted by the deepening crisis in the county's sub-prime mortgage sector that is shaking markets.

"If you already got a dip as far as employment goes and unemployment is edging up, the question is - what's next month's number going to look like when subprime and credit jitters really start to rear their ugly head," said Alan Lancz, president at Alan B. Lancz & Associates.