The big miss in the August non-farm payrolls reading was compounded by heavily revised down figures for the previous two months and ramped up bets on a Federal Reserve interest rate cut next week.

A disappointing revenue forecast from chipmaker Broadcom added to the negative sentiment, dealing another blow to the tech sector, which was already under pressure over concerns a rally this year may have been overdone.

The highly anticipated report Friday showed an estimated 142,000 jobs were created in the United States last month, up on July but well off forecasts.

Traders have been on edge since the July figures, which helped spark a market rut on speculation that the Fed may have waited too long to cut borrowing costs as it focused on bringing inflation down.

After last month's result, some analysts pointed to the "Sahm Rule," which says an economy is in the early stages of recession if the three-month moving average of unemployment is 0.5 percentage points above its low over the previous 12 months.

Wall Street's three main indexes tumbled Friday on the latest news and pushed the dollar down against its main peers.

With the central bank set to decide next week, debate is centred on whether it will reduce rates by 25 or 50 basis points.

"The report didn't suggest a severe downturn is imminent, but the softness in the numbers certainly point to an increase in the probability a recession could be on the cards," said National Australia Bank's Rodrigo Catril.

"The Fed may just cut by 25 basis points in September, but it will keep its options open for bigger cuts in November and or December, depending on how the data evolves from here."

After the report was released, Fed governor Christopher Waller said he was open minded about how big a cut to make but that officials needed to act.

"The current batch of data no longer requires patience, it requires action," he warned, while adding that he did not think the economy was in recession or headed for one.

Meanwhile, Chicago Fed boss Austan Goolsbee told CNBC: "It raises some serious questions, not just about this meeting, but over the next several months.

"How do we make an effort to not have things turn into something worse."

In early Asian trade, Tokyo was among the worst-hit as a stronger yen weighed on exporters, while Hong Kong, Shanghai, Sydney, Seoul, Taipei and Wellington were also well down.

Tech firms again took a big hit following heavy losses in their US peers.

Advantest shed more than three percent and Tokyo Electron around six percent in Tokyo, while Taipei listed chip titan TSMC dived more than two percent, with SK hynix and Samsung each down a similar amount in Seoul.

A slight uptick in Chinese inflation did little to soothe worries about the world's number two economy.

Oil prices jumped more than one percent, clawing back some of Friday's big losses sparked by demand concerns as the US outlook weakened.

The commodity was supported by news that OPEC and other key producers had delayed a planned output boost.