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An increasingly discouraged workforce found 7,300 fewer jobs in Minnesota in July compared with June, the latest sign that Minnesota's once-enviable economy has slowed.

Economists blamed a triple hit of higher gas, grocery and home mortgage costs that squeezed any give from Minnesotans' budgets.

Retail trade accounted for 4,300 of those jobs and real estate another 1,400, all seasonally adjusted, the Minnesota Department of Employment and Economic Development reported Tuesday.

Both the state and national unemployment rates rose from 4.5 percent in June to 4.6 percent last month.

But the state's 19,165 new jobs since last July put Minnesota's 12-month growth rate at 0.7 percent, about half the national rate of 1.3 percent, further tarnishing the state's national luster.

"This report is disappointing," state economist Tom Stinson said. "It's not the kind of performance that we expect to see from Minnesota's economy."

The report offered other signs that workers may be frustrated with their prospects. The state's labor force participation rate, which has been dropping through the year, fell 0.2 percent in July to 72.7 percent, the lowest level since 1990.

A dropping rate -- the proportion of working-age Minnesotans who are either working or looking for work -- is often considered an indication that workers are discouraged about the job market. A similar figure -- the employment-to-population ratio, or the proportion of working-age Minnesotans who are actually working -- hit a 16-year low in July, down to 69.4 percent.

State officials point out that monthly numbers are prone to fluctuations. And June's report has been adjusted up to 5,000 new jobs -- 800 more than originally reported.

Officials also focused on a bright spot in the month's report -- 800 new construction jobs -- and the year-to-year job growth.

"Minnesota has experienced job gains in 17 of the last 25 months," said department Commissioner Dan McElroy.

But other economists said the state has hit a hard patch and will likely stay there for a while.

"I see the fingerprints of the housing slowdown on this report," said Scott Anderson, senior economist for Wells Fargo & Co. in Minneapolis. "We expect it to slow consumer spending and employment over the next year or so, as the housing recession plays out."

Shopping, anyone?

Over the past few months, retailers in Minnesota have announced a string of layoffs and store closings -- including Macy's, Wickes Furniture, and CompUSA -- that were expected to eliminate several hundred jobs.

The big numbers drop mostly represents summer jobs that shops typically add but did not this year because of low June and July sales, said Oriane Casale, assistant research director at the department. It's the largest one-month drop in 10 years, according to state records.

"The jobs we normally see in the summer months just aren't there," Casale said.

The drop in real estate jobs comes primarily from real estate agencies, but also from rental firms, she said.