(Updated, 9:20 a.m.)

WASHINGTON – The U.S. unemployment rate rose to 9.8 percent in September, the highest level since 1983, the U.S. Department of Labor said Friday.

The nation’s economy shed 263,000 jobs last month, the 21st consecutive month that payrolls fell, the government reported. The largest job losses were reported in construction, manufacturing, retail and government.

The unemployment rate increased by one-tenth of a percentage point, from 9.7 percent in August. The government revised downward the total number of jobs lost in August, saying 201,000 positions were gone, not the 216,000 originally estimated.

The number of jobs lost was significantly more than economists had forecast. The median projection in a Bloomberg survey of 81 economists this week was 175,000 job losses. They also said the rate would rise to 9.8 percent.

The “underemployment” rate, which also counts discouraged workers and those stuck in part-time jobs who would prefer full-time work, rose to 17 percent from 16.8 percent.

MarketWatch described the September employment report as “almost universally dismal.” U.S. stock-index futures fell Friday morning after the release of the report, which fueled concerns that an ongoing lack of jobs could put the breaks on an economic recovery.

The U.S. economy has lost 7.6 million jobs since the recession began in December 2007, the most since the Great Depression, the Labor Department said. The unemployment rate has doubled.

Federal Reserve Chairman Ben S. Bernanke on Thursday said U.S. economic growth in 2010 probably won’t be strong enough to “substantially” bring down the jobless rate, and so unemployment may still be above 9 percent by the end of next year, Bloomberg reported.

Bernanke said he is particularly concerned about the “exceptionally high” number of people out of work for more than six months.

Separately, Federal Reserve Bank of Richmond President Jeffrey Lacker on Thursday told Bloomberg the Fed may have to raise interest rates “when growth re-establishes itself firmly enough,” even if unemployment remains near 10 percent.

The Fed has never raised rates prior to unemployment peaking since 1954, according to Goldman Sachs Group Inc.

The unemployment rate in Rhode Island was 12.8 percent in August, the most recent month for which figures are available, according to the Labor Department.

In a report earlier this week, Rick Cobb, executive vice president of Challenger, Gray & Christmas, a Chicago-based outplacement firm, warned that retailers are unlikely to hire a significant number of seasonal workers for the upcoming holiday shopping season.

“It may outpace last year’s holiday hiring, but that is not saying much, considering retailers added the fewest seasonal workers in nearly 20 years,” he said.

Cobb also predicted state and local governments, which have been hit hard by slumping tax revenue, may have to keep cutting jobs. “We could continue to see heavy downsizing in this sector for several more months, until employment in these cities and states begins to recover,” he said.