The unemployment rate in the United States rose to 8.5 per cent in March — a level not seen since late 1983 — as 663,000 jobs were lost.

The U.S. Department of Labour said Friday that since the recession began in December 2007, 5.1 million jobs have been lost, with 3.3 million of those losses occurring in the last five months. The number of people out of work in the U.S. last month climbed to 13.2 million.

Economists had been expecting job losses last month to be around 650,000.

"It's an ugly report and April is going to be equally as bad," said Mark Zandi, chief economist at Moody's Economy.com.

"In March, job losses were large and widespread across the major industry sectors," the department said.

The U.S. manufacturing sector lost 161,000 jobs, with losses spread throughout the sector. Since the start of the recession, the sector has lost 1.5 million jobs.

The construction sector has also suffered deeply, with 126,000 jobs lost last month, bringing total jobs losses in the sector since the start of the recession to about 1.1 million. More than half of those losses have come in the last five months.

In the service sector, temporary help services employment shrank by 72,000 in March, while retail employment fell by 48,000. The financial services sector shed 43,000 jobs, while employment in transportation and warehousing dropped by 34,000.

"Today’s report suggests no let-up in labour market weakness in March," said RBC assistant chief economist Paul Ferley. "Given the upward trend in jobless claims going into April, there is the risk of deepening job losses in April."

Canadian unemployment figures for March are due to be released at 7 a.m. ET on April 9. Canada's jobless rate hit 7.7 per cent in February, when 82,600 jobs were lost, the fourth consecutive month of declines.

With files from Associated Press