Employers eliminated 4,000 jobs in August, the first drop in four years and a sign that the painful credit crunch that has unnerved Wall Street is putting a strain on the national economy, the Associated Press reported.

The latest snapshot of the employment climate, released by the U.S. Labor Department this morning, also showed that the unemployment rate held steady at 4.6 percent, mainly because hundreds of thousands of people left the work force.

Job losses in construction, manufacturing, transportation and government offset gains in education, health care, leisure, hospitality and retail. Employment in financial services was flat. The weakness in payrolls reflected fallout from a deepening housing slump, a credit crisis and financial turbulence that has made businesses more cautious in their hiring.

The report was much weaker than economists were expecting. They were forecasting payrolls to grow by 110,000. Many believe the report will give the Federal Reserve a reason to lower interest rates when it meets on Sept. 18.