The United States jobless rate jumped in February to 8.1%, according to official figures from the Labour Department. The number of people out of work rose by 651,000 during the month. Both figures were bigger than expected.
The number of job cuts in January was revised up to 655,000 while December's losses were pushed up to 681,000.
December's figure was the biggest job loss in a single month since October 1949. The unemployment rate was the highest since December 1983.
President Obama said that the number of jobs lost so far in the recession was astounding.
Speaking in Ohio, he added: I don't need to tell the people of this state what statistics like this mean, saying that he had signed his economic stimulus package in order to save jobs.
The extra 161,000 jobs added to December and January's figures mean that almost two million jobs have been lost in the past three months. A total of 12.5 million people are now unemployed in the US.
President Obaa’s economic advisor Christina Romer described the situation as “atrocious” adding “there’s nothing positive in these numbers”.
“Americans are suffering” she said in an interview with CNBC, recalling that President Obama had anticipated “things would get worse before they improve”. However in spite of the situation she said the US economy would finally recover”.
There were further signs of companies cutting back on their spending with the news that the number of people who wanted to work full-time but were forced to work part-time for economic reasons rising 787,000 to 8.6 million.
The average working week stood at 33.3 hours, matching the record low set in December. Jobs were cut in most sectors, with only government, education and health services adding staff.
In the manufacturing sector 168,000 jobs were cut in the month while 104,000 jobs went in construction and 375,000 were cut in the service sector.
The payroll numbers are very weak. With the revisions, we've had significant job losses in the past four months, said Gary Thayer, senior economist at Wachovia Securities in St Louis.
Companies are reducing workers and output in order to bring inventories into line with weak sales. Among the companies that announced big job cuts in February were Goodyear, Estee Lauder, Macy's and General Motors.
Federal Reserve Chairman Ben Bernanke told Congress earlier in the week that economic indicators show little sign of improvement and suggest that ”labour market conditions may have worsened further in recent weeks”.