Global stocks have tumbled after the US government released poor jobs market figures that showed a meagre 69,000 jobs added in May, with the unemployment rate rising to 8.2 per cent.
In the first five minutes of trade, the Dow Jones Industrial Average was down 1.1 per cent and the S&P 500 fell 1.3 per cent, while the Nasdaq lost 1.4 per cent.
The jobless rate also dented Barack Obama's reelection hopes and boosted his foe Mitt Romney who brands the president a failure who cannot create jobs.
Labor Department figures bolstered fears of an economic slowdown -- only 69,000 jobs were added in May and the unemployment rate rose to 8.2 percent, numbers that detonated in the middle of a cliffhanger US election race.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
"It is now clear to everyone that President Obama's policies have failed to achieve their goals and that the Obama economy is crushing America's middle class," Republican White House candidate Romney said.
"The President's re-election slogan may be 'forward,' but it seems like we've been moving backward. We can do so much better in America. That's why I'm running for president."
The White House, however, insisted that Obama was on the right path after shepherding the United States out of the worst economic crisis since the Great Depression and urged Congress to pass job creating measures languishing on Capitol Hill.
"There is much more work that remains to be done to repair the damage caused by the financial crisis and deep recession that began at the end of 2007," said Alan Krueger, chairman of Obama's Council of Economic Advisers, in a written statement.
"Just like last year at this time, our economy is facing serious headwinds, including the crisis in Europe and a spike in gas prices that hit American families' finances over the past months.
"It is critical that we continue the President's economic policies that are helping us dig our way out of the deep hole that was caused by the severe recession."
Krueger argued that Obama had proposed policies to create employment and strengthen the economy, including those that would put teachers back to work and more police on the streets and add jobs through infrastructure projects.
But most of those measures have been stalled by Republicans in Congress.
The jobs data will dismay Obama's campaign team which is locked in a tight race with Romney ahead of the November 6 election, in which the sputtering economic recovery, is seen as the Republican's best hope of victory.
Recent polling shows that while Obama enjoys advantages on foreign policy and in his ties to the middle class, Romney is as, or more, trusted for his capacity to improve the US economy -- the top election issue.
What may be most damaging is that the data do not appear to represent a one off downward blip in the unemployment and economic situation, as fears mount that overseas crises, including in Europe, could spread to the United States.
The Labor Department's figures were well below expectations of an increase of 150,000 jobs.
They represented the smallest increase in new jobs since May 2011 and marked the first increase in the unemployment rate since last June.
The Labor Department also slashed its estimate of April job gains by 33 percent, to 77,000, and lowered its March estimate to 143,000.
The jobs data come at a time when Obama is seeking to negatively define Romney for voters, arguing that the Republican's instincts as a millionaire venture capitalist would not create jobs and would only benefit big business.
Obama's searing attacks on Romney's past, as head of Bain Capital, an asset management fund he founded, however keep being undermined by Democrats who are ostensibly supporting him.
On Thursday former president Bill Clinton, the most high-profile Democrat in America apart from the president, said on CNN that Romney's business career and time as Massachusetts governor qualified him to be president.
However, Clinton said that Obama was a better bet for America, said he expected the president to win by five or six points in November and that his policies would be better than Romney's for the economy.
Obama was Friday heading to the midwestern state of Minnesota to make remarks on the economy, and was due to hold a string of political fundraising events before spending the night in his hometown of Chicago.
