RABAT (Reuters) - Morocco's unemployment rate rose to 9.4 percent in the second quarter from 7.8 percent in the same period last year as drought hit the labour-intensive farming sector, official data showed on Wednesday.

All the 188,000 created jobs in the second quarter were in urban areas, mostly in construction and service sectors, while the farming industry lost 93,000 jobs, according to the country's top planning body.

As a result, job creation rose 0.5 percent in cities while the jobless rate rose 1.7 percent in the countryside, bringing the total number of unemployed to 1.060 million from 859,000 in the second quarter in 2006, the High Planning Commission said.

A severe drought slashed Morocco's cereals harvest to 2.0 million tonnes this season from 9.3 million tonnes in the previous period, the government says.

Morocco's agriculture accounts for more than 40 percent of employment and up to 20 percent of gross domestic product.

The government has predicted economic growth would shrink to 3.5 percent this year from 8.1 percent last year.

Trimming unemployment is a priority for the government.

Morocco must create 400,000 jobs a year over the next 10 years versus an average of 130,000 in the past decade to prevent mass unemployment from threatening stability, according to an official report.