US employers cut a deeper than expected 190,000 jobs in October, driving the unemployment rate to 10.2%, the highest in over 26 years.

The US Labor Department said the unemployment rate was the highest since April 1983 and October's non-farm payrolls loss was the smallest since August last year.

It revised job losses for August and September to show 91,000 fewer jobs lost than previously reported.

Analysts had expected payrolls to drop by 175,000 and the jobless rate to edge up to 9.9% from 9.8% in September.

The jobs market is being watched for signs whether the economic recovery that started in the third quarter can be sustained without government support.

The economy grew at a 3.5% annualised rate in the July-September period, probably ending the most painful US recession in 70 years.

Payrolls have declined for 22 consecutive months now, throwing 7.3 million people out of work since December 2007, when the recession started.

However, the pace of lay-offs has slowed sharply from early this year, when nearly 750,000 jobs were lost in January. In October, job losses were across almost all sectors, with education and health services and professional and business services bucking the trend.

Manufacturing employment fell 61,000 last month, while construction industries payrolls dropped 62,000.

The service-providing sector cut 61,000 workers in October and goods-producing industries slashed 129,000 positions. Education and health services added 45,000 jobs, while US government employment was flat.

US President Barack Obama said the jump in the unemployment rate was a 'sobering' figure that underscored the economic challenges ahead.

President Obama also said he had signed a bill that extended jobless benefits and homebuyer tax credits.