Nov 6, 2009, 16:04 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 had 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.
President Barack Obama said the double-digit rate was a 'sobering number that underscores the economic challenges that lie ahead.' He noted the pace of job losses was continuing to slow but said the administration would not rest until the declines were reversed.
The unemployment 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 the stock losses by mid-day.
The higher rate could well put pressure on the White House and Congress to do more to ease the pain for US households.
Obama on Friday signed legislation that extends 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.
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. Obama cautioned that creating jobs always lag behind in an economic recovery.
'Although it will take time and it will take patience, I am confident that our economy will recover,' Obama said.
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