WASHINGTON - PRESIDENT Barack Obama says unemployment in the US is likely to increase for several months as the economy recovers from its deepest downturn in decades.

The president said on Tuesday that renewed employment typically lags behind other signs of improvement as a swooning economy turns around.

More than 2 million jobs have been lost since Congress passed Mr Obama's US$787 billion (S$1.34 trillion) economic stimulus package. The unemployment rate stands at 9.5 per cent, the highest in 26 years.

Mr Obama said the single biggest challenge for the US and other nations is the creation of enough jobs that pay good wages.

He spoke at the White House after meeting with Dutch Prime Minister Jan Peter Balkenende.