Unemployment in the US rose much faster last month than economists had predicted, sending the official jobless rate to 6.4%.
The rate in June reached its highest level for nine years, confirming fears that the economic slump in the US is far from over.
"It's ugly on the surface and uglier when you look inside," said PNC Financial Services Group chief economist Stuart Hoffman.
"You now had declines in private sector jobs for five straight months."
In fact, economists said the growing army of unemployed in the US was fast becoming a threat to economic recovery.
"On balance the latest report on employment adds up to a stagnant labour market that continues to menace consumer spending," said Moody's Investors Service chief economist John Lonski.
Lengthy joblessness
Economists had predicted that the unemployment rate to rise from 6.1% in May to 6.2% in June.
"This report is broadly worse than expected," said Brown Brothers Harriman senior economist Lara Rhame.
"The haemorrhaging of manufacturing continues, there doesn't seem to be any abatement," said Mr Hoffman.
In the past three months, unemployment has increased by 913,000.
In the same period, the stock market - or the blue-chip Dow Jones index, at any rate - has shot up almost 15%, amid a chorus of optimistic claims that the economic fundamentals indicate a return to health for the US economy.
Mixed picture
Last month, 30,000 jobs were lost in the US, the bulk of them within the manufacturing sector, the Labor Department said.
About 2.6 million jobs have been lost in the sector during the past two years - although booming housebuying and growing retail sales mean service sector employment is holding up.
And long-term unemployment is also on the rise.
In June, 2 million people had been unemployed for 27 weeks or more.
That represents a sharp rise since the equivalent figure at the beginning of the year of 1.6 million people.
The headline figures, as some economists pointed out, also fail to register people who are out of work but who have given up looking for a new job.
Recovery ahead?
But not all economists were gloomy.
"This is a lagging indicator," cautioned Puglisi chief market strategist Ozan Akcin, referring to the way companies often cut jobs well into a recovery period before they realise that the future is beginning to look bright.
"I think we're entering a growth phase, but we can see job losses continuing and I don't think we'll be adding any jobs until the end of the year.
"But it doesn't mean economic recovery is off course," he said.
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