Employment in the United States fell by a worse-than-expected 240,000 jobs in October as companies slashed their payrolls amid an economic downturn.

The plunge in payrolls sent the unemployment rate up to 6.5 per cent, from 6.1 per cent in September. The jobless rate has not been that high since March 1994.

Economists had forecast October job cuts totalling 200,000.

Employers have now cut their payrolls for 10 consecutive months.

The U.S. Labour Department also issued a sharp revision to September's job numbers. The government said 284,000 jobs were lost in the month, much worse than the initial estimate of 159,000.

August's initial estimate of 73,000 jobs losts was also revised downward to reflect a loss of 127,000 jobs.

From August through October, U.S. employers cut more than 650,000 jobs. For all of 2008, the U.S. has lost about 1.2 million jobs

No 'sugar coating' can improve jobless results: strategist

October's job losses were spread throughout the U.S. economy, including:

• 90,000 jobs lost in factories, the most since July 2003.
• 49,000 jobs in construction, with many in house building.
• 38,000 jobs in the retail sector.
• 45,000 jobs in the professional and business services sector.
• 24,000 jobs in financial services, including big losses in mortgage banking and at securities firms.
• 16,000 jobs in leisure and hospitality.

The dismal U.S. jobs report had economists using adjectives such as "staggering" and "awful."

"There is no sugar-coating that can make this report look any better," said Millan Mulraine, an economics strategist at TD Securities.

"It was simply awful, and has confirmed the fears that the U.S. labour market has been hit particularly hard by the ongoing financial and housing crisis. And with conditions in the U.S. economy continuing to worsen, the prospects for the job market are not necessarily any better," he said.

Mulraine added that monthly job losses in the U.S. are expected to top 100,000 for months to come.