Around 573,000 Americans lost their jobs last week - 58,000 more than the week before and a 26-year high - as the world's largest economy plunged headlong into a long and deep recession.

According to official data published today, the number of newly unemployed Americans is now rising at its fastest rate since the last recession and is rapidly outpacing Wall Street's expectations of 525,000.

The numbers provide new evidence that America has been taken by surprise at the speed with which the economy is deteriorating. Around 6.7 per cent of the American workforce is now out of a job.

Ian Shepherdson, chief US economist at High Frequency Economics, described the data as "awful".

He said: "It is very clear that the underlying trend in claims is still rocketing,as companies throw in the towel and prepare for a long, deep recession. There is no prospect of any real improvement in payrolls until claims turn down; that still seems a long way off."

The rapidly rising unemployment rate represents the biggest challenge for Barack Obama, the US President Elect, who takes office on January 20. Mr Obama has already promised to try and stem the surge in joblessness by investing more than $500 billion in public infrastructure projects such as road building to spur job creation in the construction, engineering, and design sectors. Such a model copies measures devised in the 1930s by Franklin Roosevelt under his New Deal.

As a sign of the deepening recession, Stanley Works, the construction services group which owns the Stanley Knife brand, said that it is to sack 10 per cent of its workforce, which represents about 2,000 employees.

John Lundgren, the chairman, told shareholders that: "While these actions are difficult ... we feel it is imperative to move decisively to manage through the steep global economic decline we are currently experiencing." He added that the cuts are expected to save $170 million a year and also warned that profits for 2008 would be lower than expected.

Separately, the October US trade deficit rose unexpectedly to $57.2 billion, well above expectations of $53.5 billion. The higher than expected number reflects an increase in oil imports, which had been expected to fall in line with gasoline prices.

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