WASHINGTON, Oct 3: A struggling US economy lost 159,000 jobs in September as the weight of the housing collapse and credit crunch hit a broad swath of industries, government data showed on Friday.

“There is little doubt that the nation is in a recession, which will only deepen in coming months as the financial crisis casts a pall on economic activity,” said Sophia Koropeckyj at Economy.com.

“This was much worse than was expected, as the full weight of the banking crisis, the cost of imported oil and job losses to China bore down on manufacturing and the broader economy with unrelenting pressure,” said Peter Morici, economist at the University of Maryland.

The unemployment rate held at 6.1 per cent, a five-year high, the Labour Department said.

The report on nonfarm payrolls, seen as one of the best indicators of economic momentum, showed a sharp rise in the number of cuts after 73,000 job losses in August.

It was the ninth consecutive month of declining payrolls, according to the report, which was weaker than the average analyst forecast of a loss of 105,000 jobs.

Payrolls have fallen by 760,000 so far this year as the world’s biggest economy has been roiled by a massive collapse in housing that spread to the financial sector and led to global credit crunch.

The latest data showed the economy expanded at a healthy 2.8 per cent pace in the second quarter, but most analysts say the figure was misleading because of a surge in exports and the impact of a one-time government stimulus.

Over the month of September, employment continued to decline in manufacturing, construction, and retail trade, while some gains were seen in health care and mining.

The manufacturing sector lost 51,000 jobs over the month, bringing the decline in factory jobs to 442,000 over the past 12 months, the report said.

About 18,000 jobs were lost last month in the auto sector, which has been reeling from weak consumer spending and confidence.

Some 35,000 jobs were lost in construction along with 40,000 in retail trade.—AFP