Washington - Unemployment in the United States rose to 6.5 per cent in October, after another 240,000 jobs were lost in a worsening sign for the economy, the US Labour Department reported Friday.

The jobless rate jumped from 6.1 per cent in the previous two months, and marked an increase of 1.7 per cent, or 2.8 million fewer jobs, over the last year. The total number of US unemployed now stands at 10.1 million, the department said.

"Today, we received monthly job report numbers that reflect the difficult challenges confronting our economy," President George W Bush said in a statement.

"We are in the midst of a global financial crisis, and tight credit markets have made it harder for businesses to borrow the money they need to meet their payrolls, grow, and create new jobs," he said.

Last week, the government said the US economy contracted by 0.3 per cent in the third quarter of 2008, the sharpest decline in seven years amid the global financial crisis that has blocked credit access and severely dampened consumer spending.

Although the formal definition of a recession is two straight quarters of negative growth, analysts have been saying for more than a month that the recession has already arrived.

On Thursday, the International Monetary Fund drastically cut its global economic forecasts and predicted a recession in the US and the world in 2009.

In an update of its World Economic Outlook from October, the IMF said global growth would slow to 2.2 per cent in 2009, down from the 3-per-cent forecast made last month and from 3.7 per cent expected this year. Growth of under 3 per cent is rated by the IMF as a global recession.

Heads of state from 20 countries are to meet November 15 in Washington at an emergency summit to chart the way forward out of the crisis in the finance industry. World credit lines have been blocked by foreclosures on 3 million mortgages in the US as an inflated housing bubble burst.

Banks and financial firms had invested heavily in securitized packaging of the mortgages, which were increasingly sold to buyers with questionable credit ratings as the housing market heated up. (dpa)