Mohamed El-Erian, the chief executive of top bond fund PIMCO, on Friday said the risk of a double-dip in economic growth in 2010 is increasing given a still-weak labor market.

While there are some signs that economic recovery is taking shape, a soft job market and flat incomes could hinder a sustained recovery, El-Erian told Reuters after the release of the latest U.S. employment figures.

Friday, the Labor Department said the pace of U.S. job losses slowed in August with employers cutting 216,000 from payrolls, fewer than forecast, after a 276,000 drop in July. But the unemployment rate jumped to 9.7 percent from 9.4 percent.

The risk of a double dip for U.S. economic growth in 2010 is increasing, said El-Erian, who oversees $850 billion in assets for Pacific Investment Management Co.

This challenges equity markets that are currently pricing a V-like recovery in corporate revenues and credit availability.

(Reporting by Jennifer Ablan; Editing by James Dalgleish)

Unemployment