The government yesterday reported that the nation's civilian unemployment rate last month rose to 5.9 percent as another 265,000 Americans were dropped from company payrolls in almost every sector of the economy and almost every region of the country.

The announcement from the Labor Department removed virtually all doubt that the U.S. economy has entered a recession, and prompted the Federal Reserve to move immediately to pump additional funds into the banking system and cut short-term interest rates.

On the bond market, long-term interest rates also fell significantly, while a number of secondary banks lowered their prime interest rate from 10 percent to 9.75 percent.

The 5.9 percent jobless rate was the highest in two years, a jump of 0.2 percentage points from October. And with the number of jobs down by nearly half a million in the last two months, economists said the economy is almost certainly producing fewer goods and services than it was before -- a textbook sign of a recession. Overall, the economy is probably now shrinking at an annualized rate of somewhere from 2.5 percent to 4 percent, they said.

In Washington, figures released yesterday showed that although the unemployment rate declined slightly in October, the area lost jobs over the past year -- the first such decline since the 1982 recession.

"The {national} economy appears to be caving in and sliding very sharply in the fourth quarter," said Allen Sinai, chief economist at The Boston Co. "We're in the heart of a downturn. Business looks like it's falling off a cliff.

"This report looks like a recession, it walks like a recession. ... It is a recession. And it's full-fledged, accelerating and widespread," Sinai said.

"It's a bleak situation in River City," added Sam Kahan, chief economist at Fuji Securities in Chicago, who until yesterday's report had thought there was still a good chance that the nation could avoid a full-blown recession.

Of the jobs lost in November, the bulk -- roughly 200,000 -- were in manufacturing. But employment also fell in almost every other industry except health care, the Labor Department said.

The loss of jobs has reached more and more of the country, too. In the Washington area, for instance, figures released yesterday showed that in October the region crossed a disturbing benchmark: For the first time since the 1982 recession, the area lost jobs over a 12-month period. Even as recently as a year ago, the Washington area economy was adding jobs at the rate of more than 60,000 a year.

"We're just at the beginning of the negative job growth," said Richard Groner, chief of labor market information for the D.C. Employment Services Department, which compiles the jobs figures for the area. "I would expect over the next several months we will see a continuation of the current trends. Nobody should expect a rapid turnaround."

The October to October decline in local payrolls would have been worse except for an increase in government jobs. Private sector employment fell by 13,300 jobs.

Surprisingly, the Washington area unemployment rate declined a tenth of a point to 3.4 percent in October, in spite of other indicators of the sagging local economy. The reason, experts speculate, is that the pool of workers is barely growing, both because the number of people moving into the area has slowed and because some workers who have lost their jobs have decided not to seek another.

Nationally, the number of unemployed people -- those who do not have jobs but were actively seeking them -- rose to 7,355,000 last month, up more than half a million since July, the report said.

While the number of jobs was falling, the number of hours worked rebounded from a sharp drop in October, except in manufacturing. The total number of hours by all employees actually rose 0.2 percent last month, an indication that the output of the entire economy is not declining as fast as the number of jobs.

The Fed's decision yesterday to add new cash to the banking system led analysts to conclude that the central bank had lowered its target for the key federal funds rate -- the interest rate banks charge each other for overnight loans -- from 7.5 percent to 7.25 percent. As usual, the Fed made no announcement of the move.

It was the third such quarter-point reduction in the funds rate since the beginning of November, and Fed-watchers said more cuts are likely early next year if not before in an effort to stimulate business expansion.

In addition, earlier this week the Fed reduced the amount of reserves banks are required to hold, a step that likely will boost bank profits by about $900 million next year and could encourage more lending to businesses and consumers.

With other short-term rates also falling yesterday, several small and medium-size banks cut their prime lending rate to 9.75 percent, the first drop in the prime since January. Most business loans and a growing share of consumer loans, such as home equity lines of credit, are tied to the prime.

No major banks went along with the prime rate cut yesterday, although many analysts predicted they would do so next week, perhaps by reducing their rates to 9.5 percent.

Meanwhile, yields on long-term U.S. government bonds also fell sharply to 8.18 percent. That is down more than a full percentage point since the end of September, when yields on such bonds nearly reached 9.25 percent.

Analysts said the weakening economy that has lowered the demand for loans, the Federal Reserve cuts in short-term interest rates, an improving outlook for inflation and the agreement to reduce the federal budget deficit reached early last month all have played a role in bringing down long-term rates.

Interest rates on home mortgages, which usually follow government bond rates closely, will be falling in coming weeks, analysts predicted.

Lower rates could encourage more home buying and building and more business investment, developments that could help limit the extent of the current slump.

Furthermore, lower rates should help reduce loan losses at many financial institutions that have been under so much pressure coping with losses that they have been reluctant to make as many loans as they otherwise would. The lower interest rates will also help lower the government's borrowing costs.

The employment report was universally regarded as a sign of great economic weakness.

In testimony before the Joint Economic Committee, Janet L. Norwood, commissioner of labor statistics, said the nation has lost nearly 800,000 factory jobs since January 1989. Of last month's payroll decline, the automobile industry accounted for 55,000 of the lost jobs while supplier industries such as rubber and plastic products and textiles lost a combined 25,000 jobs, she said.

Fuji's Kahan and many other forecasters believe that the nation's gross national product will be down between 2.5 percent and 4 percent during the last three months of the year, and will not start growing again until the second or third quarter of 1991. The unemployment rate could rise to 6.5 percent or 7 percent before it peaks, they predicted.

The Fed's next move to counter the downturn likely would involve both another reduction in the federal funds rate and a cut in the Fed's 7 percent discount rate. The discount rate is what banks have to pay for borrowing from the Fed rather than from each other.

Unlike the national figures, the Washington area unemployment report runs one month behind the national one, and is not adjusted for seasonal factors.

The jobless rate for Maryland, which was also announced yesterday, was unchanged at 4.5 percent in October. In the District, unemployment fell from 6.8 percent to 6.6 percent; in the suburbs the rate was unchanged at 3.0 percent.

The area growth in state and local government jobs -- they went up by 12,000 during the last year -- seemed incongruous given recent announcements by the states of Virginia and Maryland and by Prince George's County that they are laying off workers. But none of the layoffs has yet taken place.

The losses were in sectors that had played a crucial role in the region's growth in the mid-1980s: construction and various services, including computers and data processing.

This appears to be the first time in recent history that the region's private sector has lost jobs. Twelve thousand jobs vanished from the economy in 1982 during a deep nationwide recession, but nearly all of those were in the federal government sector; the private economy continued to grow.