America’s unemployment rate pushed through the 10 per cent mark in October for the first time in 26 years.

The Labour Department said that 190,000 jobs had been lost in October, worse than the 175,000 expected by economists, pushing the unemployment rate to 10.2 per cent — the highest figure since April 1983.

The data is being watched closely as economists ponder whether the United States can sustain a recovery without government stimuli after emerging from recession in the third quarter.

Last week, figures revealed that gross domestic product (GDP) had risen by 3.5 per cent between July and September. This week, Labour Department figures showed that first-time claims for jobless benefits had fallen fell by 20,000, better than expected, to a seasonally adjusted 512,000 in the previous seven days.

America’s recovery left Britain as the only big economy languishing in recession after China, Japan, Germany and France also reported rising GDP. However, some economists believe that the US unemployment rate could climb as high as 10.5 per cent next year because employers, sceptical about the strength and sustainability of the recovery, are not expected to start creating jobs in significant numbers — and thus generating net gains in employment — for several months.

Christina Romer, who heads President Obama’s Council of Economic Advisers, said that the unemployment rate was not unexpected but was still a disappointment, even though the figures were an improvement on the 219,000 jobs lost in September.

“It’s a stark reminder of how much work remains to be done to get people back to work,” she said.

However, Ms Romer pinpointed signs of hope in the figures. One of the biggest positive contributions to employment in October came from temporary work — usually the first area to recover from recession — which added 34,000 extra jobs.

“The motor vehicle industry also posted employment gains. These are hopeful signs that the unprecedented policy actions are working to stabilise the economy and put us on a path toward recovery,” she said.

Since the start of the recession in December 2007, the number of unemployed people in America has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points.

The largest job losses last month were in construction, manufacturing and retail.

Paul Ashworth, senior US economist at Capital Economics, a consultancy, said: “Temporary jobs aren’t the type of positions that you want to see being created in an economy further into a recovery, but, at this early stage of the cycle, that rebound in temporary jobs suggests employers will be adding extra permanent positions over the next few months.”

He added that the recovery was shaping up to be a “jobless” one, just like the last two.

“Our concern is that, unlike the last recovery, with credit still tight, households aren’t going to be able to smooth their consumption using credit until the labour market eventually strengthens,” he said.

The market took the figures in its stride, with the Dow Jones industrial average flat at 10,007 in lunchtime trading and the Nasdaq rising 0.56 per cent to 2,105.20, while the S&P 500 fell 0.2 per cent to 1,066.42.

Counting the cost

10.2% America’s latest unemployment rate

190,000 Number of jobs lost in October

3.5% Third-quarter rise in America’s GDP

34,000 New jobs available for temporary workers

8.2m Rise in jobless since start of the recession

Source: Times research

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