The jump in US unemployment above 10 percent 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 Friday showing an official jobless rate of 10.2 percent also suggests the Federal Reserve will maintain near-zero interest rates and other efforts to pump up credit to spark growth, say economists.
The Labor Department 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.
The improvement was not enough, however, to prevent the jobless rate from surging to the first double-digit level for more than 26 years, from 9.8 percent in September.
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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 aging 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 percent represents a setback for the recovery and 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 787 billion-dollar 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 percent. Here we are today with both an unemployment rate and a fiscal deficit-to-GDP ratio both north of 10 percent."
Cary Leahey, senior economist at Decision Economics, said the rise in joblessness poses new challenges for Obama.
"If you're a politician in Washington of the Democratic variety, this is far worse than last month," he said.
"This report is a soft start to the fourth quarter," he said. "It is consistent with a double-dip (recession) or W-shaped recovery."
Leahey said that even though the labor market is showing improvement, "the 10 percent figure will grab all the headlines."
Robert MacIntosh, economist at Eaton Vance, said the overall report was "not all that bad," with revisions but that "the headline of 10 percent was huge psychologically."
"This means a slower, more frustrating economic recovery," he said.
The jobless rate rise occurred even with a downward revision to the number of job cuts in the prior two months.
Non-farm payrolls fell by 219,000 in September (instead of the prior estimate of 263,000) and by 154,000 in August (revised from 201,000).
Overall, the monthly report was worse than expectations for a 10 percent jobless rate and 175,000 job losses despite the improving trend.
"The headline number of 10.2 percent will be shouted from the mountaintops and from the voters," said Andrew Busch, analyst at BMO Capital Markets.
"The Federal Reserve and the US Treasury are in the glare of the klieg lights to get something done to arrest the job losses."
Fred Dickson at DA Davidson & Co. said the report "continues to point to an economy that is struggling, but the picture is not nearly as dire as seen at the beginning of the year."
"Slowly, the trajectory is improving, but, given the huge number of unemployed and underemployed, our view of a very slow economic recovery in 2010 and 2011 remains very much in place," he added. "This report will not do much to encourage the Fed to raise rates anytime soon."
The number of unemployed persons increased to 15.7 million. Since the start of the recession in December 2007, the number of unemployed has risen by 8.2 million, the Labor Department said.
The world's largest economy grew at a seasonally adjusted 3.5 percent annual rate in the July-September period. The increase was the first since the second quarter of 2008.
For the US economic community, the recession will not be over until it is declared by a research panel, National Bureau of Economic Research, recognized as the official arbiter of business cycles.