Jobless hits 26 year high

President Barack Obama. Photo / AP

The jump in US unemployment above 10 per cent for the first time since 1983 will pressure President Barack Obama to find additional stimulus to keep a fragile economic recovery on track, analysts say.

The weaker-than-expected Labor Department report, showing an official jobless rate of 10.2 per cent, also suggests the Federal Reserve will maintain near-zero interest rates and other efforts to pump up credit to spark growth, say economists.

The report, seen as one of the best indicators of economic momentum, showed job losses narrowed last month to 190,000. Revisions also showed fewer job losses in August and September.

However, the improvement was not enough to prevent the jobless rate from surging to the first double-digit level for more than 26 years, from 9.8 per cent in September.

President Barack Obama called the numbers "sobering" and said his administration was considering "further steps" to spark job growth.

"To that end, my economic team is looking at ideas such as additional investments in our ageing roads and bridges, incentives to create jobs and steps to increase the flow of credit to small businesses," he said.

Analysts said the rise above 10 per cent represents a setback for Obama's efforts to lift the economy out of recession.

David Rosenberg, chief economist at Gluskin Sheff & Associates, said the economy remains in peril even after the impact of a US$787 billion ($1106bn) stimulus enacted earlier this year.

"The return to job creation is as elusive as ever," he said.

"It is hard to fathom that, according to the White House estimates earlier this year, the stimulus was supposed to help cap the unemployment rate at 8.5 per cent.

"Here we are with both an unemployment rate and a fiscal deficit-to-GDP ratio both north of 10 per cent."

- AP