The number of people out of work has risen in spite of signs that the US recession is easing [AFP]

The labour department reported on Friday that 263,000 jobs were lost in September, far worse than analysts' expectations that 180,000 people would fall out of work.

The unemployment rate in September rose from 9.7 per cent in August - meaning that the rate is at its highest level since June 1983.

If part-time workers or those who have given up looking for jobs are accounted for, the unemployment rate rose to 17 per cent, the highest level on record.

About 7.2 million jobs have disappeared, eliminated since the recession began in December 2007, the report said.

Economic woe

The latest figures are in spite of indications that the US is beginnig to recover from its deepest recession since the 1920s and 1930s.

"Consumers ... are going to struggle to increase their income," Brian Fabbri, North American chief economist for BNP Paribas, said.

"If they are struggling, they're not consuming. That just takes some of the legs out of recovery."

A protracted period of high unemployment is a challenge to Barack Obama, the US president, whose administration rolled out a $787bn economic stimulus package.

The plan, which has been widely attacked by Republicans as interference into the financial markets, is intended to "save or create" 3.5 million US jobs by the end of 2010.

Protracted high unemployment

Christina Romer, chair of the president's council of economic advisers, said that although the unemployment rate is increasing, the number of job losses month-by-month is shrinking.

"We're going from much larger job losses earlier this year. They are moderating. We want them to moderate more," she said.

But Republicans have seized on the fact that job losses have continued despite the stimulus package.

"Wasteful government spending is not the solution to what ails this economy," Mike Pence, chairman of the House Republican Caucus, said.

Ben Bernanke, the chairman of the US Federal Reserve, said on Thursday that the US unemployment rate would not fall quickly even if the economy were to grow at a 3 per cent pace.

Bernanke said the jobless rate will probably stay above nine per cent throughout 2010.

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