U.S. jobless rate at 5-year high

By Glenn Somerville

WASHINGTON (Reuters) - An unexpectedly steep 84,000 U.S. jobs were lost in August and the national unemployment rate hit a five-year high of 6.1 percent, fanning worry ahead of November's presidential vote about rising recession risks.

The eighth straight month of job cuts underlined the weakening state of labour markets and prompted back-and-forth jibes by Democratic presidential contender Sen. Barack Obama and Republican nominee Sen. John McCain about how to help.

McCain called for more job training while Obama said tax cuts for working families and aid for states was needed. The Bush administration insisted the economy was "fundamentally sound" and that an additional stimulus program was not needed.

A total 605,000 employees have been slashed from payrolls so far this year -- nearly a quarter million in the last three months alone -- which private-sector analysts said clearly implies a heightened risk of an economic contraction.

"According to our estimates, the sharp rise in the unemployment rate over the past six months translates into a recession probability of 70 percent, which is higher than in 1990-91 and 2001," said Harm Bandholz of UniCredit Markets in New York, referring to the two most recent recessions.

CALLS FOR STIMULUS

The speaker of the U.S. House of Representatives, California Democrat Nancy Pelosi, renewed a pledge to seek a second economic stimulus program to pick up from one earlier in the year that has now largely been paid out to consumers.

The intently watched Labour Department jobs report caught financial markets by surprise because the losses were above expectations and June and July cuts each were revised up. The department said a total 58,000 more jobs were lost in June and July than it had previously thought.