THE US unemployment rate hit a 14-year high of 6.5 per cent in October, data showed yesterday, while the economy shed 240,000 jobs in further evidence of the crisis confronting president-elect Barack Obama.
The labour department figures were far worse than economists' forecasts of 200,000 lost jobs and 6.3 per cent unemployment.
Job losses in the US this year have reached 1.2 million after further downward revisions to non-farm payroll data for August and September.
Alan Ruskin, economist at RBS in Greenwich, Connecticut, said the data would "reinforce" talk of the jobless rate rising beyond 8 per cent, which would be its highest since the early 1980s.
Goldman Sachs said the US labour market was in "full recession mode" and predicted the jobless rate would hit 8.5 per cent next year in what would be the biggest trough-to-peak jump since the second World War.
Elsewhere, Japan said it would ease rules governing the way banks account for capital in an effort to keep loans flowing.
The move follows a similar decision this week by South Korea, which said it would delay full adoption of Basel II capital adequacy standards until 2010.
In spite of the bleak US data, equity markets rebounded after heavy sell-offs since Mr Obama's election victory on Tuesday.
The Dow Jones Industrial Average gained about 148 points to reach 8,844 in noon trading.
"It seems that firms had previously been cutting back employment only gradually, being cautious on hiring, but not aggressive on firing," said Nigel Gault, chief US economist at IHS Global Insight.
"They have now decided that the recession will be deeper than feared, and are acting more aggressively on firing, as they see demand for their products falling rapidly."
Job losses occurred in almost every sector of the economy, with healthcare and mining being two notable exceptions.
American manufacturers continued to close plants and reduce staff, resulting in some 90,000 job losses last month, including 9,000 layoffs in the ailing US motor industry.
Meanwhile, retailers shed 38,000 jobs as consumers cut back sharply on spending, and construction employment fell by 49,000.
