President Barack Obama admitted that his $787 billion economic stimulus has not boosted the jobs market as much as hoped, as he convened a major summit on employment next month.

America’s unemployment rate hit a 26-year peak of 10.2 per cent in October despite the giant stimulus package and a further $700 billion put aside for the financial sector rescue.

The Labor Department said today that 502,000 people claimed unemployment benefits for the first time in the week to November 7. It was the lowest number of weekly claims since January 3 and 12,000 lower than the previous week.

Economists said that this could mean that the job market had reached bottom and was starting to stabilise.

President Obama said, however, that the economic growth created by his stimulus package had not led to growth in employment.

The US economy expanded in the third quarter at an annual rate of 3.5 per cent but it has "not yet led to the job growth that we desperately need", the President said.

He said that the White House would consider additional steps – though not further stimulus spending – to create jobs. He called on company bosses, small businesses and unions to meet next month on an as-yet unannounced date to work on a solution.

“We have an obligation to consider every additional, responsible step that we can to encourage and accelerate job creation,” President Obama said.

Republicans have seized on the President’s failure to stem rising unemployment as a weak point in his Administration.

Without a recovery in the jobs market by June 2010 – when pundits believe that Americans will make up their minds on who to vote for in November’s midterm Congressional elections – the Democrats faces losing vital seats.

The recession that started in the US in December 2007 has now claimed more than eight million jobs despite the President’s giant stimulus package and the $700 billion set aside to prop up the financial sector.

Last week the President signed a $24 billion bill to extend unemployment benefits for up to 20 extra weeks.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive