US employers cut a more than expected 263,000 jobs in September, lifting the unemployment rate to 9.8%. The latest government report fueled fears that the weak labour market could undermine economic recovery.
The Labor Department said the unemployment rate was the highest since June 1983 and payrolls had now dropped for 21 consecutive months. Analysts had expected non-farm payrolls to drop 180,000 in September and the unemployment rate to rise to 9.8% from 9.7% the prior month.
The US government also revised job losses for July and August to show 13,000 more jobs lost than previously reported.
Stubbornly high unemployment is viewed as the missing link in the economy's recovery from its worst recession in 70 years. The economy is believed to have started growing in the third quarter.
Since the start of the recession in December 2007, the number of unemployed people has risen by 7.6 million to 15.1 million, the department said.
While the decline in payrolls has moderated from early this year, companies are still not hiring on a wide scale, likely waiting for a signal that the economic recovery is sustainable.
The figures showed that manufacturing employment fell by 51,000 in September, while construction industries payrolls dropped. The service-providing sector cut 147,000 workers in September, while goods-producing industries shed 116,000 positions.
Education and health services added a mere 3,000 jobs, while government employment fell 53,000.
Even more worrying, the average workweek, which closely correlates with overall output and gives clues on when firms will start hiring, dipped to 33 hours in September from 33.1 hours in August.
Average hourly earnings inched up to $18.67 from $18.66 in August.
