The U.S. lost more jobs than forecast in September, reflecting a decline in government payrolls that shows the damage being done by rising fiscal deficits.

Employers cut staffing by 95,000 workers after a revised 57,000 decrease in August, Labor Department figures in Washington showed today. The unemployment rate unexpectedly held at 9.6 percent.

Private payrolls that exclude government agencies climbed 64,000, less than forecast, underscoring the concern expressed by some Federal Reserve policy makers that the rebound from the worst recession since the 1930s has been too slow and may require easier monetary policy. Economists surveyed by Bloomberg project unemployment will average at least 9 percent through 2011, which may restrain consumer spending, the biggest part of the economy.

“The pace of this employment rebound has been quite sluggish,” Steven Wood, president of Insight Economics LLC in Danville, California, said before the report. “Employers are still very cautious about hiring.”

The unemployment rate slipped to 8 per cent in September from 8.1 per cent as fewer people, particularly youth, looked for work, Statistics Canada said Friday.

The report shows Canadian employers are taking a pause in hiring, after a strong start to the year. Over the past year, total employment has risen by 349,000 positions, recouping the jobs lost during the recession, though that’s been led by part-time work. Part-time employment has grown by 4.6 per cent, outstripping 1.5-per-cent growth in full time.

The report “is not nearly as dire as the headline decline would suggest, given the strength in full-time and private sector jobs,” said Douglas Porter, deputy chief economist at BMO Nesbitt Burns. However, “there is no denying the fact that employment conditions have cooled markedly from the piping hot pace seen as recently as the spring.”

Solid job gains will be “tough to come by” in the coming months as the lacklustre pace of growth in the U.S. has spilled over into Canada.

In September, part-time work fell by 44,000 while full-time jobs rose by 37,000 in full time.

Youth employment fell, again. Employment among 15- to 24-year-olds fell by 42,000, led by Ontario. “Losses in recent months have erased gains from the start of the year, bringing youth employment back to levels of a year ago,” the agency said.

For workers aged 25 to 54, increases among men outweighed a drop among women. Employment levels among women are now similar to a year ago, while they’ve risen 2.3 per cent for men (who were harder hit through the recession).

Older workers continue to land jobs. Men and women aged 55 and over posted employment increases in September, with increases of 20,000 for men and 17,000 for women. Over the past year, employment for this age group has surged by 7.7 per cent among men and 5.9 per cent among women -- the highest rates of growth among all demographic groups.

By province, Ontario, Saskatchewan, New Brunswick and Prince Edward Island all saw employment declines. Ontario’s jobless rate is 8.8 per cent. Quebec, Newfoundland and Labrador as well as Nova Scotia posted gains, Statscan said.

Employment in most industries was little changed. Employment slipped in professional, scientific and technical services, after rising for much of the past year, while it rose in transportation and warehousing.

Wage growth hasn’t changed. Average hourly wages for employees rose 2.3 per cent last month from a year ago, a similar pace to the previous two months.

The split between public and private-sector jobs was unchanged in September. Over the past year, growth in the public sector has swelled by 3.7 per cent, outpacing the private sector, with 2.4-per-cent growth. That composition may change in the year ahead as governments of all levels trim budgets and slow hiring.

Economists had expected 10,000 new jobs would be added last month.