U.S. employers slashed 663,000 jobs in March, lifting the unemployment rate to 8.5 percent, the highest since 1983, official data showed on Friday in a report underscoring the growing distress in the labor market. The Labor Department also revised January data to show job losses of 741,000 that month, the biggest decline since October 1949, as the economy battles a recession that has entered its 16th month. The decline in non-farm payrolls in February was unrevised at 651,000. Analysts polled by Reuters had forecast non-farm payrolls falling 650,000 in March. They had forecast the unemployment rate rising to 8.5 percent from 8.1 percent the prior month. Since the start of the recession in December 2007, the economy has shed 5.1 million jobs, with about two thirds of the losses occurring in the last five months, the department said. The manufacturing sector shed 161,000 jobs in March, after eliminating 169,000 positions the prior month. Construction industries lost 126,000 jobs after bleeding 107,000 in February. The service-providing industry axed 358,000 positions after shedding 366,000 in February.

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