The unemployment rate rose to 7.2 percent in December, the highest level in 15 years, as employers shed 524,000 non-farm jobs, the U.S. Labor Department reported today.

In all, nearly 2.6 million jobs were lost in 2008, with 1.9 million job cuts in the last four months alone.

Last year’s drop in employment was the worst since the end of World War II.

The decline in payrolls was in line with forecasts and followed a decrease of 584,000 in November, Bloomberg reported.

The outlook for 2009 is no brighter as retailers from Wal-Mart Stores Inc. to Macy’s Inc. have slashed profit forecasts and manufacturers, including Alcoa Inc., have cut output and staff.

“We’re seeing pretty ugly numbers as the recession is worsening,” Michael Gregory, a senior economist at BMO Capital Markets in Toronto, told Bloomberg before the report was released. “It’s going to be devastating in terms of consumer confidence and spending. The next couple of months will be dismal.”

Last month’s decline was the 12th consecutive monthly drop in payrolls. The economy created 1.1 million jobs in 2007.

The Labor Department report said factory payrolls shrank 149,000, the biggest drop since August 2001, after decreasing 104,000 in November. Economists had forecast a drop of 100,000.

The decrease included a loss of 21,400 jobs in the auto and auto parts industries. Manufacturing, which makes up 12 percent of the economy, shrank in December at the fastest pace in 28 years, according to Institute for Supply Management figures.

Builders dropped 101,000 jobs. Financial firms reduced payrolls by 14,000, after a 28,000 loss the prior month.

Service industries, which include banks, insurance companies, restaurants and retailers, laid off 273,000 workers after a decline of 402,000 in November and retail payrolls dropped by 66,600 after a 100,000 decrease.

Government payrolls increased by 7,000 after falling 3,000 the prior month.