Until last month, only the city's manufacturing sector had lost jobs compared with the prior year, said the analyst, Mr James Brown.

The financial sector is the bedrock of the city's economy, but many companies have been hurt by the credit crisis and have seen their profits decline, prompting waves of job cuts.

Economists have been waiting for the first signs of how the Wall Street downturn is affecting employment. 'We knew it was going to do this and it finally did,' said Mr Brown.

New York City's financial sector includes banks and brokerages, as well as real estate and insurance companies.

These companies employed 469,800 in June 2008, including 179,000 in the securities industry.

Wall Street has already shed 7,600 workers this year, Mr Brown said. Banks and brokerages saw their first year-over-year losses in April, posting a 400-job decline.

'They're in the middle of a cyclical downturn, they've been through them before. The job losses obviously will be substantial,' Mr Brown said, noting that securities companies have cut their staffs by 20 per cent to 25 per cent in past downturns.

The city had 3.683 million workers in June, still higher than a year-ago. But the unemployment rate, based on a separate survey, rose 5/10ths of a percentage point from May to 5.3 per cent. That was up 3/10ths of a percentage point higher from June 2007.

As often is the case, the Bronx, the poorest of the city's five boroughs, had the highest jobless rate, at 7 per cent, an increase of 5/10ths of a percentage point from May. On a historical basis, Mr Brown said that is not particularly high rate for the Bronx.

The city's other major economic sectors all added jobs in June, but that pattern could reverse if the national economy sinks further, Mr Brown said. The construction industry, for example, faces considerable uncertainty because the ability of banks to lend has withered.

Builders usually add workers in spring and summer, and there were 2,100 more construction workers employed this June than a year-ago, Brown said.

Partly due to the weak dollar, which helps lure foreign visitors, employment in the the leisure and hospitality industry rose by 6,200 from June 2007 to June 2008.

Trade, transportation and utilities employed 7,900 more workers, the government sector added 3,200 people, and professional and business services hired 1,400 employees. -- REUTERS