Employment in the United States fell by a bigger-than-expected 240,000 in October, while September's fall was revised up massively to 284,000, meaning the world's biggest economy has shed over half a million jobs in the past two months alone.
The figures highlight the difficult economic situation President-elect Barack Obama will inherit when he assumes office in January as the numbers show unemployment has risen to a higher rate than during the recession of the early part of this decade after the dotcom bust.
"We have entered the phase of serious recession conditions. Unfortunately we will encounter more of this going forward," said Richard Dekaser, economist at National City Corp in Cleveland, Ohio.
Payrolls have fallen for the past 10 months in a row and a total of 1.2 million jobs have so far been lost this year. September's job losses were the worst since November 2001 in the aftermath of 9/11.
The labour department also said that the jobless rates in America rose to a higher than expected 6.5% from 6.1% in September, the worst rate since March 1994.
The revision to September's figure was unusually large - the labour department last month estimated the loss of jobs at 159,000. August's number was also revised up, to 127,000 from the 73,000 previously reported.
Markets took fright at the numbers with the dollar falling further against the yen while US stock futures fell back, dragging the FTSE 100 lower in its wake. Interest rate futures moved to price in another big interest rate cut from the Federal Reserve which last month reduced borrowing costs to just 1%.
"This report highlights the intensifying downside risks for economic activity and suggests that further policy stimulus is necessary," said James Knightley, economist at ING Financial Markets.
"We look for an additional 50bp Fed rate cut in December and the Presidential transition team to be looking at stepping up the pace on the implementation of a second fiscal package."
