The U.S. jobless rate has spiked to its highest level in 26 years, hitting 9.7 percent in August.

Labor Department officials said Friday the United States cut 216,000 jobs last month and that the country shed more jobs in June and July than originally thought.  

Many economists and some government officials have said they expect the unemployment rate to top 10 percent even as the economy begins to improve.

Friday's report from the Labor Department report also found the so-called underemployment rate - which includes the number of people who have settled for part-time jobs or who have given up looking for work - jumped to 16.8 percent in August.

Despite the increases, the report found the pace at which the country is losing jobs has eased.  

On Thursday, U.S. Vice President Joe Biden said the government's vast $787 billion stimulus package is helping and has improved "the trajectory of our economy."

The package was approved months ago, but much of the money has not yet been spent. Critics say the plan is overly complex.

He spoke about the same time a report showed the services sector of the economy shrank at a slower pace in August than the previous month, and has nearly returned to growth. Services make up the bulk of the U.S. economy.

Economists caution the jobless rate will continue to rise because employment lags behind changes in other parts of the economy.

Some information for this report was provided by Bloomberg, AP and Reuters.