The U.S. economy slammed into a wall in August, failing to add any jobs for the first time in nearly a year and ratcheting up pressure on President Barack Obama to find a way to kick-start the sputtering recovery.

Underscoring the political problem posed by the dearth of hiring, Mr. Obama on Friday asked the Environmental Protection Agency to withdraw an air-quality proposal that Republicans and business groups said could kill thousands of jobs and cost hundreds of billions of dollars a year.

The...