NEW YORK, Nov 8: The dollar wobbled slightly against the euro on Friday as a grim US employment report signaled the United States has entered a painful recession.

The single European currency was at $1.2719 around 2200 GMT, up a notch from 1.2713 late Thursday. Against the Japanese currency, the dollar rose to 98.21 yen from 97.72 yen.

The US unemployment rate rose in October to its highest level since 1994, official data showed Friday, with analysts forecasting it to increase further in Barack Obama’s first year as president.

The Labour Department said the jobless rate rose to 6.5 per cent as the world’s largest economy shed 240,000 jobs amid the credit squeeze and downturn.

The US economy has lost jobs for 10 straight months in 2008 and the Labour Department revised losses in August and September sharply higher.

This was a worse than expected report that indicates we are in a pretty steep recession. Fourth-quarter growth could be quite ugly, said Joel Naroff at Naroff Economic Advisors.

The damage from the housing collapse and credit crunch is cumulating,Naroff said, noting the Federal Reserve policymakers do not meet again until after the November jobs report, on December 16.

The dismal jobs news also increased speculation that the Fed would lower interest rates again, after slashing its key rate by a half point, to 1.0 per cent, on October 29.

The FOMC (Federal Open Market Committee) members will undoubtedly be under pressure to cut again, even if that would be a meaningless gesture, he said.

Analysts forecast that the jobless rate would climb above 7.0 per cent next year after Obama’s inauguration on January 20, with the peak seen about 7.5 per cent in the middle to end of the year.

The data confirmed the severity of the economic downturn underway in the United States where months of turmoil on stock markets, tightening of credit and record-low consumer confidence have taken their toll.

Paul Ashworth of Capital Economics was even blunter.

As if any more proof were needed, the news that non-farm payroll employment fell by significantly more than 200,000 in each of the last two months confirms that the US economy is not only in a recession, but a potentially severe recession that could last for some time, he said.

In late New York trade, the dollar rose to 1.1783 Swiss francs from 1.1775 late Thursday.

The pound edged up to $1.5645 from 1.5623.—AFP