WASHINGTON – Unemployment rose to a 16-year high of 7.2% in December, as businesses cut 524,000 non-farm jobs, the Department of Labor reported today.

The economy lost 2.6 million jobs last year–1.9 million in the last four months–the most since 1945. The total number of jobs declined during each month of 2008.

The number of persons unemployed in December was 11.1 million, up from 10.4 million the previous month.

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During the past year, the number of unemployed has increased by 3.6 million and the unemployment rate has grown by 2.3%.

The department said the unemployment would have been even higher if it had included in the 1.9 million people who have given up seeking work, the same as in the previous month.

Wage growth also remained sluggish, average hourly earnings grew 5 cents, compared with 8 cents in November. In 2008, average hourly earnings increased 3.7% and average weekly earnings rose 2.2%.

As in November, employment increased in government and health care while it decreased in manufacturing, construction, and professional and business services.

There were 149,000 manufacturing jobs lost last month, the largest monthly decline since August 2001. That sector lost 791,000 jobs last year.

Other key losses included: the construction industry, 101,000 jobs; professional/business service, 81,000; and retail, 67,000.

The number of people who worked part time out of necessity-because they could not find full-time work–rose to 8 million, up from 7.3 million in November and a 3.4 million increase in the last 12 months.

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