INSTANT VIEW: Non-farm payrolls down in August

(Corrects paragraph 3 to show the August unemployment rate was the highest since September 2003, not December 2003)

NEW YORK (Reuters) - The U.S. unemployment rate unexpectedly shot up to 6.1 percent in August, its highest in nearly 5 years, as employers cut payrolls for an eighth straight month and labor markets showed signs of accelerating decline.

KEY POINTS: * The Labor Department said 84,000 jobs were lost in August, significantly higher than the 75,000 that economists surveyed by Reuters had forecast. In addition, July's job losses were revised up to 60,000 and June's to 100,000 from a previously reported 51,000 in each month. * Department officials said the August unemployment rate was the highest since September 2003. Analysts had expected the rate to remain steady at July's 5.7 percent rate rather than to jump. * There were steep cuts in hiring in nearly every major category of employment. Some 61,000 manufacturing jobs were lost in August, the most for any month since mid 2003, and 8,000 more construction jobs were cut. There were 53,000 jobs eliminated in professional and business services and 4,000 in leisure and hospitality industries. * The average hours of work remained unchanged from July at 33.7 but employers cut overtime to an average 3.7 hours per week in August from 3.8.

COMMENTS:

PHIL FLYNN, ANALYST, ALARON TRADING, CHICAGO:

"There's a realization that we're going into an economic slowdown with the rest of the world, but there is a sense that the U.S. is further along in this issue and that the crisis here is probably heading towards the end while the rest of the world is still grappling with it. We in the U.S. have already priced in a lot of bad news on the dollar."

DANA SAPORTA, ECONOMIST, DRESDNER KLEINWORT SECURITIES LLC, NEW YORK:

"The job market is getting softer and companies are trying to use their payrolls as efficiently as they can. As they try to adjust to slowing demand, they unfortunately have to reduce jobs. But this could lead to a perpetual cycle because more job losses could lead to even slower consumer spending."

"The risk to the economy is still clearly on the downside. The Fed had already cut rates aggressively in anticipation of a slowdown. Fed officials will keep monetary policy on hold for a long time, probably well into 2009."

ANDREW BRENNER, SENIOR VICE PRESIDENT, MF GLOBAL, NEW YORK:

"While the unemployment rate was over six percent, the rest of the numbers show an economy that is growing. We will say that there were big technical reasons the rate went above six percent and should reverse next month."

DOUG ROBERTS, CHIEF INVESTMENT STRATEGIST, CHANNEL CAPITAL RESEARCH, SHREWSBURY, NEW JERSEY:

"It's very sobering and shows that credit crises of this magnitude can be cushioned by the Fed, but not cured. The credit situation will take longer to work itself out.

"Treasuries are up because the flight to quality has returned. And the bond market is now more attractive than it was when oil prices were rising. Right now with oil prices coming down, people are saying this does not look like a stagflationary environment. And with the dollar rallying, international investors are starting to say that U.S. Treasuries look like a nice safe haven for their money."

BORIS SCHLOSSBERG, HEAD OF CURRENCY RESEARCH, GFT FOREX, NEW YORK:

"Very ugly across the board. The most startling thing for the market was this huge jump in the unemployment rate. That's the highest number in five years. The jobless rate suggests that the climate for job expansion has become much more difficult and suggests we are probably going to have a much harder fourth quarter facing us. The impact on the dollar itself is very problematic. We are entering a global economic slowdown and a global decline in interest rates. All of those factors are going to be positive for the yen. The euro may not be the primary benefactor of this bad news, the yen is. We don't think U.S. interest rates are going to rise anytime in the near future, given the statistics we are seeing now, especially on the labor front."

CARL LANTZ, U.S. INTEREST RATE STRATEGIST, CREDIT SUISSE, NEW YORK:

"Obviously it was very weak and we had downward revisions to the prior month that actually make the number look even worse than the minus 84,000. The big number was in the unemployment rate up to 6.1. That's a continuing theme of more people coming into the work force, reflecting the stress on the household balance sheet and need to send more people into the work force. But they're not finding jobs."

BENJAMIN HALLIBURTON, CHIEF INVESTMENT OFFICER, TRADITION CAPITAL, SUMMIT, NEW JERSEY:

"The unemployment situation is getting progressively worse and you are seeing an uptick in unemployment as the economy weakens. Some of this is expected. Most people thought unemployment would rise above 6 percent over the course of this year. Maybe the speed or bumpiness catches some people by surprise."

"Clearly the economy is running into a major slowdown and

I would not be surprised to see third quarter GDP be modestly negative."

"Treasuries have been getting set up for a slowing economy and lessening inflation. The 10-year and 30-year have both had pretty big rallies over the past month, which is why you are not seeing a bigger move in Treasuries.

"I think the Fed definitely doesn't need to be raising the fed funds rate."

"This (economic outlook) is beginning to take a rate increase off the table for at least another six months."

DAVID RESLER, CHIEF ECONOMIST, NOMURA SECURITIES, NEW YORK:

"The big jump in the unemployment rate is the big surprise in this... non-farm payrolls are not much of a surprise, a drop of 84,000.

"We had once again data revisions to the last couple of months. We're running job losses that are typically seen in the early stages of a economic recession, we're probably in one, the unemployment rate going up that much over the last year, and especially in a single month.

"A single-month increase raises red flags about sampling errors and other technical reasons that may have occurred, but there's no escaping that it's bad news for the economy.

"It's consistent with the idea that the weakness in the economy and we might well be in a recession."