UNEMPLOYMENT in the US has hit a 26-year high, with 9.7 per cent of the workforce out of a job, official figures show — though the pace of layoffs slowed in August, raising hopes that the worst of the recession is over.

American businesses cut 216,000 staff last month, according to the closely watched non-farm payrolls figures, released by the labour department. That was the lowest number of job losses in a year in January, almost three quarters of a million people lost their jobs.

In total, 6.9 million Americans have now lost their jobs since the downturn began in late 2007. In August, the heaviest toll came in the construction sector, where 65,000 jobs went, while manufacturers laid off 63,000 people.

The latest news boosted hopes that the US economy is finally on the mend. Barack Obama is under pressure to show that a turnaround is under way, after battling to win approval for his $800bn fiscal stimulus package.

“Although the job losses continued in major industry sectors in August, the declines have moderated in recent months,” the labour department said.

However, some economists warned that US firms need to start creating jobs to ensure long-term recovery.

John Canally, an analyst at LPL Financial in Boston, said “The tension between now and the end of the year lies in the question of whether, after the support provided by the government's stimulus package, the private sector can stop shedding jobs in time to help the economy stay on a sustainable recovery.”

— The Guardian, London