Washington  - The US economy continued to shed jobs in the construction, manufacturing, retail and government branches, with the unemployment rate rising to 9.8 per cent in September, the US government said Friday.

The rate compared to 9.7 per cent unemployment in August, and was the highest since 1983.

September saw the loss of another 263,000 jobs, bringing the total jobs lost since the recession began in December 2007 to 7.2 million, the biggest decline since the Great Depression.

Despite the poor jobs report, President Barack Obama said the economy is nevertheless improving but cautioned it will take time for a full recovery.

"Today's job report is a sobering reminder that progress comes in fits and starts and that we're going to need to grind out this recovery step by step," he said.

Earlier this week, there were signs that the recession was easing, with US economic growth shrinking by only 0.7 per cent - the best performance in more than a year.

But on Thursday, Federal Reserve Chairman Ben Bernanke said that expansion may not be strong enough to "substantially" bring down unemployment. Continuing high unemployment figures prevent a rise in consumer spending that makes up more than two-thirds of the US economy.

All told, 15.1 million people are out of work in the US.  dpa