WASHINGTON – As bad as Friday's jobs report was, showing October's unemployment rate jumping sharply to 10.2 percent, the outlook is likely to worsen for American workers well into next year.

Economists expect the jobless rate to keep climbing, perhaps above 11 percent, as employers produce more with fewer workers and shy away from hiring.

The nation's unemployment rate rose from 9.8 percent in September to its highest level since April 1983, even as the pace of job losses slowed sharply, the Labor Department said Friday.

Employers shed 190,000 jobs in October, the slowest pace since the devastating recession began in December 2007. The Bureau of Labor Statistics also revised its August and September unemployment numbers to reflect that 91,000 fewer jobs were lost over those two months than first reported. That trend is positive. It shows that the torrid pace of job losses in the first half of the year has slowed dramatically. That supports the recent report that the U.S. economy grew at a 3.5 percent annual rate from July through September.

There are other positive signs. The professional and business services sector added 18,000 jobs in October. Temporary employment, which usually precedes a return to broader hiring, was up by almost 34,000 last month, the third straight month of gains.

Yet the surge in the unemployment rate overshadowed all else.

"History tells us that job growth always lags behind economic growth," President Barack Obama cautioned in a statement from the White House Rose Garden on Friday, shortly after he signed a new $24 billion economic stimulus bill into law. The measure provides tax incentives to homebuyers and extends unemployment benefits for the longtime unemployed.

The House of Representatives passed the measure 403-12 Thursday in a rare bipartisan vote, a day after the Senate passed it unanimously.

Obama called the October jobless report "a sobering number that underscores the economic challenges that lie ahead."

When discouraged workers and underemployed ones are factored in, a more broadly defined unemployment rate stands at 17.5 percent. Thirty-five percent of the jobless, about 5.6 million Americans, have been unable to find work for more than six months.

Many economists had expected unemployment to hit 10 percent this year, but few thought the rate would do so by October. After Friday's jump, they began revising job forecasts down. Mark Zandi, chief economist for Moody's Economy.com, said he believes the jobless rate could hit 11 percent by mid-2010.

Sageworks Inc., a financial firm that specializes in data about privately held companies, reported that small firms will keep cutting payrolls.

"They're going to reduce their overhead. They're going to reduce their payroll. They represent at least 50 percent of the employment in the United States, and that doesn't look like it's coming back anytime soon," said Drew White, the group's chief financial officer.

Still, some analysts found grounds for optimism.

"Most people are talking about the U.S. starting to add jobs back in the second half of next year. It looks like that will start in the first half of the year, not the second half," Fred Fraenkel, of investment manager Beacon Trust Co., said in a research note.

Call Kevin G. Hall, McClatchy Washington Bureau, (202) 383-6038.