Jobless rate jumps to 14-year high

Unemployment has surpassed the high from the last recession in 2001.

WASHINGTON (AP) — The nation’s unemployment rate bolted to a 14-year high of 6.5 percent in October as an additional 240,000 jobs were cut, far worse than economists expected and stark proof the economy is deteriorating at an alarmingly rapid pace.

The new snapshot, released Friday by the Labor Department, showed the crucial jobs market quickly eroding. The jobless rate zoomed to 6.5 percent in October from 6.1 percent in September, matching the rate in March 1994.

Unemployment has now surpassed the high seen after the last recession in 2001. The jobless rate peaked at 6.3 percent in June 2003.

October’s decline marked the 10th straight month of payroll reductions, and government revisions showed that job losses in August and September turned out to be much deeper. Employers cut 127,000 positions in August, compared with 73,000 previously reported. A whopping 284,000 jobs were axed in September, compared with the 159,000 jobs first reported.

So far this year, a staggering 1.2 million jobs have disappeared. Over half of the decrease occurred in the past three months alone.

About 10.1 million people were unemployed in October, an increase of 2.8 million over the past year. A year ago, the unemployment rate stood at 4.8 percent.

President Bush said the dismal employment figures reflect “the difficult challenges confronting the economy” and urged the country to have patience, saying a flurry of unprecedented government measures — including a $700 billion financial bailout package — will take time to work.

“I understand that Americans [are] deeply concerned about the challenges facing our economy, but our economy has overcome great challenges before, and we can be confident that it will do so again,” Bush said.

The employment market is much weaker than economists expected. They were forecasting the unemployment rate to climb to 6.3 percent in October and for payrolls to fall by around 200,000.

“The U.S. recession is deepening,” said Michael Gregory, economist at BMO Capital Markets Economics. The final quarter of this year is getting off to a “particularly ugly” start, he said.

Job losses were widespread, reflecting the mounting carnage from a trio of crises — housing, credit and financial.

Factories cut 90,000 jobs, the most since July 2003. Construction companies got rid of 49,000 jobs with heavy losses in home building. Retailers cut payrolls by 38,000. Professional and business services reduced employment by 45,000. Financial activities cut 24,000 jobs, with heavy losses in mortgage banking and at securities firms. Leisure and hospitality axed 16,000 positions.

All those losses more than swamped some gains elsewhere, including in the government, as well as in education and health care.