The US lost jobs in June for the sixth month in a row while unemployment remained elevated, signalling an ongoing deterioration in the labour market and helping to push back thoughts of a hike in interest rates.

Non-farm payrolls fell by 62,000 last month, only slightly more than the 55,000 jobs that economists had predicted, and in line with the upwardly revised 62,000 jobs lost last month.

However, revisions to earlier reports showed that 52,000 more jobs had been lost in the prior two months than previously thought.

“The net number is grim,” said Ian Shepherdson, economist at HFE, adding that there was “worse to come”.

The unemployment rate held at 5.5 per cent, 0.1 percentage point higher than expected. Economists had been hoping that the jobless rate would dip down again, arguing that the previous month’s sharp uptick - the biggest monthly rise in 22 years – was a statistical quirk caused by the inclusion of too many school and college leavers in the figures.

“Six straight months of job losses are the strongest evidence yet that the economy has slipped into a recession of uncertain depth and duration,” said Peter Morici, an economist at the University of Maryland School of Business.

Last week the Federal Reserve ended a series of aggressive cuts in interest rates enacted to counter the threats posed by the housing slump and credit crisis, keeping rates rates on hold at 2 per cent and warning over inflation risks amid record oil and food prices.

Treasury bond prices fell after the jobs data, as investors who had feared higher lay-offs sold off their government debt holdings. The S&P 500 rose.

Non-government jobs fell by 91,000 for the third month in a row, while government jobs rose by 29,000. Since peaking in December of last year, the US has lost 438,000 jobs.

Construction and manufacturing workers continued to suffer the brunt of cuts, and financial services saw an increased pace in lay-offs.

Bright spots included leisure and hospitality, which saw a 24,000 rise in jobs, and retail, which lost less jobs than in recent months, possibly benefiting from the bump in spending caused by fiscal stimulus checks sent to consumers by the government.

Initial weekly jobless claims also bumped up 16,000 to 404,000, taking the four week moving average to 390,500 – a level that some economists believe consistent with recession.

“It certainly does not feel as if things are going to be improving any time soon, and the full impact of the spring spike in energy prices has probably not been felt yet,” said economists at Royal Bank of Scotland Greenwich Capital in a note.

Another report out on Thursday showed that the US service sector shrank last month, while inflation pressures soared to a record high.

The Institute for Supply Management’s non-manufacturing index came in at an unexpectedly low level of 48.2 for June, versus 51.7 in May. A reading of less than 50 indicates contraction. Economists had predicted a reading of 51. The service sector makes up around 80 per cent of the US economy.

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