Unemployment rate hits 6.5%, a 14-year high

Employers slashed jobs from one end of the economy to the other in October, pushing the unemployment rate to 6.5%. That's the highest level in more than 14 years, and makes a deep recession a virtual certainty.

Almost no sector of the economy was immune to the decline. The biggest losses were in manufacturing and construction, but they were joined last month by big cuts in retail trade, financial services, and leisure and hospitality.

"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 U.S. economist with consulting firm 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."

Employers shed 240,000 jobs in October, and the toll in September was far worse than previously reported -- 284,000, up from an initial reading of 159,000.

The economy must normally create about 100,000 jobs a month just to keep pace with population growth. So far this year, the economy has shrunk by nearly 1.2 million jobs, the Labor Department said.

The latest cuts pushed the unemployment rate, which was 6.1% in September, almost half a percentage point higher in one month -- a sign that employers, facing slackened demand for their goods and services, were responding by cutting jobs.

Even two of the more robust employment sectors -- healthcare and government, which includes public servants such as teachers and police -- grew more slowly than in the past.

The last time the unemployment rate was so high was in the first quarter of 1994, when the economy was still struggling to recover from a recession.

The situation facing job seekers today is even worse when so-called discouraged workers are factored in -- an 11.8% overall unemployment rate in October, the Labor Department estimated, up from 11% in September. Officially the unemployment rate counts only those who have lost employment and are actively looking for new work; it does not include those who have stopped trying to find work or are working part time because they can't find a full-time job.