The latest state jobs report has some bad news and some good news.

While Minnesota employers cut 10,300 jobs in August and wiped out all the job gains seen in July, the state's monthly seasonally adjusted unemployment rate fell by 0.1 percent from July to 8 percent.

Economists say that, although the numbers provide more reason to believe we're emerging from the Great Recession, it looks like a long, slow climb ahead.

"I am a little discouraged," said Dan McElroy, commissioner for the Minnesota Department of Employment and Economic Development. "I would have been a lot happier if we had shown an increase in jobs this month, but that didn't happen." McElroy also noted that neither the number of temp agency jobs nor hours worked seemed to rise during the month, which would have been one other indicator signaling that the local recession was beginning to ease. But it was not to be.

For August, eight sectors lost jobs, with leisure and hospitality leading the pack, down 3,200. Trade, transport and utilities cut 3,000 jobs and education and health services lost a surprising 2,200 jobs after a few months of gains. About 2,100 government jobs also were lost.

Only three sectors reported gains: professional/business services, information, and "other services."

The state also reported that the job gains it previously reported for July proved overly optimistic. After more businesses reported their results to the state, the July jobs increase of 10,300 was cut to 7,700.

Nationally, the unemployment rate in August climbed 0.3 percent to 9.7 percent.

State Economist Tom Stinson said the drop in Minnesota's unemployment rate is good but noted that it fell in part because about 6,000 workers dropped out of the labor market, either because they were too discouraged to hunt, had retired or had left the state.

Seasonal factors are in play

Still, he was encouraged that Minnesota's unemployment rate continues to distance itself from the national rate. He emphasized that August's numbers must be taken in context over several months and that no one should be too depressed or cheered by one month's data, especially because August's employment numbers will be influenced by seasonal hiring and back-to-school statistics that won't be fully factored in until about November.

Over the next six to nine months, Stinson expects that the state's unemployment rate will come down along with the number of job losses. But he said it could take months before the unemployment rate and number of job losses begin to march in sync.

Minnesota employers cut 120,300 jobs between August 2008 and August 2009, a drop of 4.3 percent. That's slightly better than the nation's 4.4 percent employment decline.

Minnesota's education/health services and government sectors gained 11,600 and 700 jobs, respectively, for the year, while the manufacturing sector cut 40,100 jobs, and professional and business jobs fell by 33,900 positions.

For the month of August, 28,835 Minnesotans filed initial jobless claims, 5,020 fewer than in July. Year over year, initial claims rose 74.6 percent, or 12,317, due mainly to layoffs in the manufacturing, construction, utilities and health care/social assistance fields.

State officials noted that job vacancies fell 39.4 percent from one year ago to 31,400 during the second quarter because of changes across all sectors except construction and personal care and service. About 17,400 of the job vacancies were in the Twin Cities.

7.7 jobless for each vacancy

There were 7.7 unemployed workers for each job vacancy. "This ratio indicates that the second quarter 2009 labor market was the least favorable for job seekers during the history of the job vacancy series dating back to fourth quarter 2000," state officials said in their report.

Steve Hine, the state's labor market information director, cited the recent speech made by Federal Reserve Chairman Ben Bernanke and noted that while he believes the very worst of the recession may be coming to an end, "We are really still at the bottom" of the business cycle.

Some other nonemployment leading indicators, such as consumer confidence and business-activity indexes, are beginning to improve. However, business-cycle changes and employment gains sometimes lag such indicators "quite significantly," Hine said.

Nationally, the Labor Department announced Thursday that the number of initial jobless claims fell by 12,000 during the week of Sept. 12. That drop followed a surprising 19,000 decline for the preceding Labor Day week.

During last week 545,000 initial jobless benefit claims were filed, which is about 30,000 fewer than economists and analysts expected. The four-week average of initial claims has fallen by 8,750 to 563,000.

Dee DePass • 612-673-7725