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Minnesota's unemployment rate dipped slightly in June, but the latest state jobs report suggests that the slow fade of the state's economy from national front-runner to also-ran is continuing.

Since 2004, Minnesota's growth in jobs, per-capita personal income and output of goods and services have risen at a lower pace than the national average. That's a departure from the 1980s and 1990s, when Minnesota outshone most states on such important measures.

And while Minnesota added 4,200 jobs in June, much of the increase came on local and state government payrolls. The number of manufacturing jobs, in contrast, fell for the seventh time in 10 months.

"We're losing ground," said Minnesota State Economist Tom Stinson. "It's gone on long enough that it's disquieting."

The downward trend is especially puzzling in light of tax cuts and other measures taken this decade that were meant to make the state more competitive.

For a while, those measures seemed to be working. From 2002 through 2005, Minnesota's average annual unemployment rate was a full percentage point -- or more -- better than the national rate.

Between May 2006 and May 2007, however, it climbed from 3.9 percent to 4.6 percent, the first time in 30 years of record- keeping that it was higher than the national average.

Some say it's too early to declare that the North Star State's economy is dimming.

"It can pure and simply be timing. I don't know," said John Berglund, a job-market watcher at the Minnesota Department of Employment and Economic Development. The industries where Minnesota is strongest may simply be at the trough of their business cycles, Berglund said.

"But it does give me pause for thought," he added.

Maya Nestingen, 28, said she has found the job market slow since getting her degree in liberal arts at the University of Minnesota in 2004. It took her 10 months to find a job after graduation. She has worked at the Guthrie Theater and at a salon and spa but wants a position where she can draw on her arts background.

So far, all she can find are retail jobs. "Most just want a warm body to ring people up," she said.

Toby Madden, regional economist at the Federal Reserve Bank of Minneapolis, is among those who sees more good than bad in the statistics.

"We may hit bumps, we may hit some potholes, but we're still going to move along the highway at a pretty solid speed," Madden said.

Some people who've been out of work for months are less optimistic.

"There are so many people looking for jobs," said Malthea Little Smith, 57, who has been unemployed since March. "There's just way too many people."

Ellen Blake, 44, lost her public-relations job two months ago when her Twin Cities employer saw clients retreat or reduce spending. The accounts she worked on were in the troubled auto industry, including image-building for the Saturn division of General Motors.

"If this country continues to go down this path, we're in deep trouble," she said.