The nation's unemployment rate (search) shot up to 6.4 percent in June, the highest in more than nine years, in an economic slump that has cost nearly a million jobs in the last three months.

Businesses slashed 30,000 jobs just last month, with cuts heavily concentrated on factory assembly lines, the Labor Department (search) reported Thursday.

Last month's 6.4 percent rate — the highest since the aftershocks of the September 11, 2001 (search) terror attacks — was up 0.3 percentage point from May. That surprised analysts who had predicted a slight rise to 6.2 percent. The last time the rate was higher was in April 1994.

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.

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. Only in March 1994 was the unemployment rate higher.

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 increasing number of job-seekers, that rate increased significantly.

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.