Washington (AP)  -- Employers cut payrolls by 62,000 in June, the sixth straight month of nationwide job losses, underscoring the economy's fragile state. The unemployment rate held steady at 5.5 percent.

The latest snapshot of business conditions, released by the Labor Department on Thursday, showed continued caution on the part of employers who are chafing under high energy prices and are uncertain about how long the economy will be stuck in a sluggish mode, reflecting fallout from housing, credit and financial troubles.

Private analysts predict the economy will continue to shed jobs in the months ahead, pushing the unemployment rate higher.

"The economy is at risk of a hard landing," said Brian Bethune, economist at Global Insight.

In a separate report from the Labor Department, the number of newly laid off people signing up for unemployment insurance rose sharply last week.

New applications jumped by 16,000 to 404,000, the highest level since late March. The increase was bigger than economists were expecting; they had forecast claims to rise to around 385,000.

Another report showed the nation's service sector -- generally an engine for the economy -- unexpectedly contracting in June.

The Institute for Supply Management's index of the service sector fell to 48.2 in June from 51.7 in May. A reading below 50 signals activity is shrinking, while a reading above that suggests activity is expanding. Economists had been predicting a reading of 51.0.

A survey of all economic sectors showed that heavy job losses in construction, manufacturing and financial services, along with cutbacks in retailing, eclipsed job gains in education and health services, leisure and hospitality, and government.

The report, however weak, was largely on target with economists' forecasts. They had been expecting employers to reduce payrolls by around 60,000 jobs in June and for the unemployment rate to slip a notch to 5.4 percent.

The jobless rate spiked to 5.5 percent in May. That marked the biggest over-the-month increase in two decades and left the rate at its highest since October 2004.

Job losses in both April and May turned out to be considerably deeper than had been thought. Payrolls dropped by 67,000 in April, versus the 28,000 previously reported. And, losses in May came to 62,000, rather than the 49,000 initially estimated.

So far this year, the economy has lost a total of 438,000 jobs, an average of 73,000 a month.

The number of unemployed people in June was 8.5 million, up from 7 million a year ago.