U.S. employers cut a deeper-than-expected 263,000 jobs in September, lifting the unemployment rate to 9.8 percent, according to a government report on Friday that fuelled fears the weak labour market could undermine economic recovery. The Labour Department said the unemployment rate was the highest since June 1983 and payrolls had now dropped for 21 consecutive months. Analysts had expected non-farm payrolls to drop 175 000 in September and the unemployment rate to rise to 9.8 percent from 9.7 percent the prior month. High unemployment is viewed as the missing link in the economy's recovery from its worst recession in 70 years. The economy is believed to have started growing in the third quarter. Since the start of the recession in December 2007, the number of unemployed people has risen by 7.6 million to 15.1 million, the department said. While the decline in payrolls has moderated from early this year, companies are still not hiring on a wide scale, likely waiting for a signal that the economic recovery is sustainable.