Minnesotans have seen big wage gains for much of this year, but prices went up even faster last month.

Hourly average wages for private sector workers rose 5.4% in November from a year earlier, the Minnesota Department of Employment and Economic Development (DEED) said Thursday. But that was less than the 6.8% increase in the nation's chief measure of inflation, the consumer price index, for November.

"It's something we know is challenging for Minnesota consumers," DEED Commissioner Steve Grove said.

In October, wage gains in the state just barely outpaced the nation's inflation rate. But that situation changed in November as inflation ticked even higher and wage gains moderated a bit.

But there were other bright spots in the latest jobs report. The state unemployment rate declined two-tenths of a percent to 3.3% in November, reaching the pre-pandemic level of February 2020. That compares to a U.S. unemployment rate of 4.2%.

And the state added 8,600 jobs last month, just a bit lower than October when it gained 9,900 jobs.

"This is the third straight month we've seen really solid, steady growth," Grove said. "While the pandemic recovery has been jumpy, this fall has provided some stability."

The largest jump came in leisure and hospitality, which added 2,900 jobs. That was followed by professional and business services with 2,100 jobs and education and health services with 1,600 jobs.

Construction and manufacturing also logged some of their biggest job gains ever in the state for November, with each industry adding 1,500 jobs.

But those overall gains were partially offset by a loss of 1,600 government jobs, 700 information jobs and 400 financial activities jobs.

In addition to inflation outpacing wages, the report pointed to other continued challenges in the labor market. About 2,575 Minnesotans left the labor force last month, knocking down the state's labor force participation rate by one-tenth of a percent to 67.7%.

There are still about 87,000 fewer workers in the state's labor force now than before the pandemic. And while Minnesota has recovered 73% of the jobs lost in the first few months of the pandemic, the gap that remains amounts to nearly 112,000 jobs.

Grove noted that DEED just announced this week $2.4 million in grants that will lead to an additional 2,300 child care slots around the state, which could help address some of the workforce issues the state is facing.

Lower-wage workers have been seeing the strongest job growth in the last year, said Oriane Casale, director of DEED's labor market information office.

Minnesota workers at restaurants and bars have seen their wages rise to $16.99 an hour, or nearly 16%. "Which is really stunning growth," Casale said.

She added that, in the last couple of months, the state has also begun to see stronger wage growth at residential and nursing care facilities, which struggled to hire and retain workers. Average wages for workers in that sector are up 7.7% to $20.64.

"There definitely seems to be a lot of upward pressure on those wages," she said. "That may have taken a little bit of time to kick in. So we'll see if that's a longer-term trend."