US joblessness jumps to 10.2 per cent, highest since 1983 (Roundup)

Nov 6, 2009, 13:46 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, surprising economists and likely prompting a sell-off on Wall Street. The worst-hit sectors were construction, manufacturing and the retail trade, the department said.

Unemployment has now climbed above 10 per cent for the first time since 1983. The rise was worse than expected - economists predicted 175,000 jobs lost and a 9.9-per-cent rate in October.

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.

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. It also could fuel a debate in Congress about whether to inject more public spending into the economy.