The Labor Department's jobs report, released Friday, brings the total number of jobs the economy has lost since the recession began in December 2007 to 3.6 million.
Factories slashed 207,000 jobs in January, the largest one-month drop since October 1982. Construction companies cut 111,000 jobs and professional and business services axed 121,000 positions. Retailers eliminated 45,000 jobs while leisure and hospitality cut 28,000 slots.
The total 598,000 jobs lost in January marked the biggest single cut since the end of 1974. The 7.6 percent unemployment rate is the highest since September 1992.
Only education and health services sectors added jobs as did the government.
Listen to Diane Swonk, chief economist for Mesirow Financial in Chicago, explain what the job numbers mean for the larger economic picture:
The latest net total of job losses was far worse than the 524,000 that economists surveyed by the Associated Press expected. Job reductions were also upwardly revised from previous months to 577,000 in December and 597,000 in November.
Both the number of unemployed persons, which is now 11.6 million, and the unemployment rate rose in January. Over the past 12 months, the number of unemployed persons has increased by 4.1 million and the unemployment rate has risen by 2.7 percentage points, the Labor Department report found.
Job hunters also are facing longer searches for work. The average time for an unemployed person to find any job -- full or part time -- rose to 19.8 weeks in January, compared with 17.5 weeks a year ago, according to the AP.
The numbers also add new pressure to President Barack Obama to craft a compromise with congressional leaders over his economic stimulus plan. Republicans and some Democrats are concerned with the proposal's $900-billion-plus price tag and a bipartisan group of lawmakers is leading an effort to pare the measure down and push it through to a Senate vote.
On Friday, Mr. Obama used a White House ceremony to renew his call to Congress to act swiftly on the recovery plan.
"It is inexcusable and irresponsible for any of us to get bogged down in distraction and delay or politics as usual while millions of Americans are being put out of work," President Obama said. "Now is the time for Congress to act."
U.S. stocks posted early gains Friday as the gloomy jobs data persuaded investors Washington would act quickly on delivering a stimulus package.
The Dow Jones industrial average added 175.78 points, or 2.18 percent, to 8,238.85 in Friday morning trading. The S&P 500 Index gained 16.18 points, or 1.91 percent, to 862.03. The Nasdaq Composite rose 30.53 points, or 1.97 percent, to 1,576.77.
"It is just another confirmation that we are in a deep and long recession, and the bottom is not even in sight," Robert MacIntosh, chief economist for Eaton Vance Management in Boston, told Reuters. "Manufacturing is incredibly weak -- it's going to be a long haul."