Nonfarm payrolls fell 54,000, the Labor Department said on Friday as temporary jobs to conduct the decennial dropped by 114,000.
Private employment, considered a better gauge of labor market health, increased 67,000 after a revised 107,000 gain in July. In addition, the government revised payrolls for June and July to show 123,000 fewer jobs lost than previously reported.
The unemployment rate edged up to 9.6 percent last month, in line with market expectations. The rise in the jobless rate reflected an increase in the labor force as some discouraged workers resumed the hunt for jobs.
While the unwinding of temporary census jobs has been a major drag on payrolls, an uncertain economic outlook has also caused businesses to pare hiring.
Jobs scarcity is hurting consumer spending, which normally accounts for about two-thirds of U.S. economic activity, leaving the recovery from the worst recession in 70 years sputtering.
Last month, the dominant service sector added 67,000 jobs after July's 70,000 rise. Temporary help services, which is seen as a harbinger of future permanent hiring, rebounded 16,800 after falling in July for the first time since September.
There were more job losses at cash-strapped state governments, pulling down government payrolls down by 121,000 compared to a 161,000 fall in July.
Employment in the goods-producing sector was unchanged last month as a drop in manufacturing offset an increase in construction payrolls, which were boosted by the return of 10,000 striking workers. Manufacturing jobs fell 27,000 after gaining 34,000 in July.
The average workweek was unchanged at 34.2 hours the previous month.