Nov 6, 2009, 15:22 GMT
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years as another 190,000 people lost their jobs, the Labour Department reported Friday.
The figure comes after a 9.8-per-cent jobless rate in September and was much higher than expected - economists predicted 175,000 jobs lost and a 9.9-per-cent rate in October.
Unemployment has now climbed above 10 per cent for the first time since 1983. The worst-hit sectors were construction, manufacturing and the retail trade, the department said.
The jobless rate has continued rising despite data showing that the US economy appears to have pulled out of its deepest recession in decades. The economy grew by an annual rate of 3.5 per cent in the third quarter of 2009.
US stocks, which rallied by the most in months on Thursday, dropped more than 0.5 per cent within minutes of opening on Wall Street. But investors appeared to be taking the announcement in stride and had recovered most of the losses through the morning.
The higher rate could well put pressure on President Barack Obama and Congress to do more to ease the pain. Christina Romer, chair of the White House Council of Economic Advisors, stressed the pace of job losses was easing despite the higher unemployment rate.
There were 'both signs of hope for recovery and painful evidence of continued labour market weakness,' Romer said. 'Having the unemployment rate reach double-digits is a stark reminder of how much work remains to be done before American families see the job gains and reduced unemployment that they need and deserve.'
More than 8 million people have now lost their jobs since the recession began in December 2007. On the bright side, the Labour Department said the number of temporary workers increased 34,000, the first gain since the start of the recession.
The department also revised upwards slightly its unemployment numbers for August and September, adding 91,000 jobs in total.
The higher jobless rate adds to the likelihood that the Federal Reserve will be keeping US interest rates at their record low of near-zero per cent.
Some in Congress have also pushed for more public spending to help revive the economy, on top of a 787-billion-dollar stimulus package approved in February.
Lawmakers on Thursday agreed to extend unemployment benefits and tax credits for home buyers. But there is significant opposition against more actions as the federal budget deficit reached a record 1.4 trillion dollars in the past year.
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