Reuters/Washington

A man waiting for his turn to use a free telephone to speak with an advisor about unemployment benefits at the Employment Development Department office in Calexico, California. Another 190,000 people lost their jobs in October, US Labor Department said yesterday

The US jobless rate unexpectedly jumped to a 26-1/2-year high of 10.2% last month, adding to pressure on the Obama administration to do more to tackle unemployment even as signs of recovery mount.
The Labor Department said yesterday that employers cut 190,000 jobs in October, more than the 175,000 markets had expected but fewer than the 219,000 lost in September.
Taking some of the sting out of the report, job losses for August and September were revised to show 91,000 fewer jobs were lost than previously reported. While that hinted at some improvement in labour market conditions, economists had looked for the jobless rate to rise to 9.9% from September’s 9.8%.
“Unfortunately, the problem is becoming deeper and more protracted,” Mohamed El-Erian, chief executive of bond giant Pacific Investment Management told Reuters. “It’s not just the increase in the headline number. ... It’s also about the longer-term nature of unemployment, the increase in underemployment, and the prospect for only a very gradual recovery.”
President Barack Obama has called job creation priority No 1, but his scope to take further steps to lift the economy is limited by record budget deficits.
Mounting unemployment could pose problems for the Democrats who control Congress as they head into congressional elections in November 2010. This week, Republicans wrested control of two state governorships away from Democrats in races where the weak economy figured prominently.
“President Obama promised jobs during his campaign for president, and the elections in Virginia and New Jersey on Tuesday were a clear referendum on his failure to deliver on this promise,” said Republican National Committee Chairman Michael Steele.
The US economy grew at a 3.5% annual rate in the third quarter, likely ending the most painful US recession in 70 years, but employers appear wary of the prospects for a strong, sustained recovery.
The Federal Reserve on Wednesday held overnight interest rates close to zero and said it would keep them extraordinarily low as long as excess economic slack and a lack of inflation warning signs prevailed. Interest rate futures prices showed traders reduced their bets the Fed will begin raising rates in the middle of next year. The implied chances of a rate hike by the mid-2010 slipped to about 66% from 84% late on Thursday.
“I don’t know how in the heck the Fed could justify tightening policy with the unemployment rate over 10% unless we have an imminent inflation danger, which based on everything I see is absent,” said Keith Hembre, chief economist at First American Funds in Minneapolis.
A wider measure of labour-market slack, which includes both the officially unemployed and people who want work but who have given up searching, hit a record high of 17.5%.
The Labor Department’s survey of households showed a loss of 589,000 jobs last month, leading to the big jump in the unemployment rate.