WASHINGTON - The nation's unemployment rate shot up to 6.4 percent in June, the highest level in more than nine years, in an economic slump that has added nearly a million people to jobless rolls in the past three months.

The verdict is in: The Republicans' multi-trillion dollar failed economic policy is one the greatest disasters for working Americans in a decade.

Sen. Jon Corzine, D-N.J.

Businesses slashed 30,000 jobs in June for the fifth straight month, with cuts heavily concentrated in the nation's factories, the Labor Department reported Thursday.

The 0.3 percentage point increase from May's 6.1 percent rate was the largest month-to-month rise since the Sept. 11, 2001 terror attacks. That surprised analysts, who predicted a smaller rise to 6.2 percent. The last time the overall rate was higher was in March 1994.

The poor economy and swelling unemployment could pose problems for President Bush next year in his re-election bid. But tax cuts recently passed by the Republican-controlled Congress are starting to take effect and will bolster job prospects, the administration has argued.

"Its effects will be felt by America's working families, seniors and small business owners later this month, as they begin receiving tax rebates and larger paychecks," said Labor Secretary Elaine Chao. "As this stimulus builds momentum, we expect to see more new jobs created and more out of work Americans receiving a paycheck again."

At the White House, press secretary Ari Fleischer said that while the economy experienced a "short and shallow recession, we are also an economy that is having a slow recovery."

Democrats are determined to make the economy a big issue in next year's elections. "The verdict is in: The Republicans' multi-trillion dollar failed economic policy is one the greatest disasters for working Americans in a decade," said Sen. Jon Corzine, D-N.J., chairman of the Democratic Senatorial Campaign Committee.

While recent economic indicators point to an economy struggling toward recovery, the latest report demonstrated that America's job market was still very much in a state of recession last month.

"It's pretty bad, there's no denying that," said Ken Mayland, president of ClearView Economics.

Since March, unemployment has increased by 913,000. Two million people were unemployed for 27 weeks or more last month, an increase of 410,000 since the start of the year.

Another factor behind the increase in the overall civilian unemployment rate was the increase in the number of people seeking work in June. Optimism about an economy rebound led over 600,000 people to resume their search for work.

Because the government calculates the overall unemployment rate based on a survey of American households, and because the lackluster economy wasn't producing enough jobs to accommodate an increasing number of jobseekers, that rate increased significantly.

"That suggests a combination of better prospects, getting the war behind us, a better stock market -- just more enthusiasm about economic prospects -- is causing people to re-enter the labor force," Mayland said, adding that the jobless rate should start to stabilize.

"It would be my bet that we're at the high-water mark," he said.

Manufacturing led in payroll cuts last month, with 56,000 jobs lost. Since July 2000, the nation's factories have cut 2.6 million jobs.

That sector has been the weakest link in the economy's ability to get back to full speed. Slack demand at home and abroad and competition from a flood of imports have throttled back production.

Construction jobs helped offset manufacturing losses somewhat last month, with the fourth straight gain in hiring. Construction has added 101,000 jobs since February, reflecting strength in residential building.

The mortgage boom, stoked by record low rates, has been the bright spot in the dismal economy. People are buying new homes and refinancing their old mortgages. The extra cash from refinancing combined with solid home-value appreciation have kept consumer spending afloat.

Other hiring gains last month were in health care, leisure and hospitality and temporary employment services.

In a separate report, new claims for jobless benefits rose last week to 430,000, an increase of a seasonally adjusted 21,000 from the previous week's revised 409,000 claims.

The more stable, four-week moving average of claims, which smooths out weekly fluctuations, dropped to 425,000. That was the lowest level since April 5.

Copyright 2003 The Associated Press

###