WASHINGTON, Nov 7: The US unemployment rate rose to its highest level since 1994 in October, official data showed on 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 during the month amid the credit squeeze and downturn.

“Employment has fallen by 1.2 million in the first 10 months. Over half of the decrease has occurred in the last three months,” the department said in a statement.

The figures underlined the challenge for incoming US president Obama.

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

The US economy has shed jobs for 10 straight months in 2008 and the Labour Department revised losses in August and September sharply higher to 127,000 and 284,000 rather than the 73,000 and 159,000 estimated a month ago.

“(Job) losses should remain heavy for several more months,” said economist Stephen Gallagher at investment bank Societe Generale in New York.

“The rate should rise to 7.5 per cent by mid 2009.” The data confirmed the severity of the economic downturn under way in the United States where months of turmoil on stock markets, tightening of credit and record-low consumer confidence have taken their toll.

“Most recent macroeconomic figures show a rapid pace of deterioration suggesting a deepening recession,” said economist Amine Tazi at investment bank Natixis, pointing to other indicators of activity.—AFP