Despite the loss of 9,900 jobs, mostly in business, government and hospitality, Minnesota's unemployment rate held steady at 7 percent last month, state officials reported Thursday.

While the job losses were a disappointment, officials at the Minnesota Department of Employment and Economic Development (DEED) blamed the drop on seasonal adjustments and pointed to other signs that the state economy may be on the rebound. Officials also revised August job gains from 600 to 800.

September's job losses hit Minnesota's professional and business services sector (down 4,000), government (down 3,800), leisure and hospitality (down 3,500), education and health care (down 2,900), other services (down 2,500), and mining and logging (down 100).

In trying to explain why the state's jobless rate remained the same while job cuts rose, Labor Market Information Director Steve Hine, cited the end of the summer season and State Fair jobs plus the generally wacky nature of adjusting for seasonal changes.

"It was a disappointment and a surprise that we saw such a significant loss of jobs," Hine said. "But I temper my disappointment [in knowing] that these seasonally adjusted numbers can be fickle."

He added that the full impact of students and teachers returning to school probably will be realized later, over the next couple of months.

Minnesota's jobless rate remained well below the U.S. rate, which held steady at 9.6 percent in September. In the past year, employment in Minnesota has grown by 1.1 percent, compared with a U.S. growth rate of 0.2 percent. Economists predict that the state and country could continue to face lackluster private-sector hiring well into 2011.

DEED Commissioner Dan McElroy said September's numbers are further clouded by the fact that more people have left the workforce who can't officially be counted as unemployed. He noted one household survey that found more workers age 63 and older deciding to retire. In addition, some people have lost their second jobs, but technically remain employed because they still have one job.

Construction jobs rise

In a surprise piece of good news, the state's construction sector added 3,100 jobs in September after months of lackluster results. The addition, the most since April 2005, was mainly due to a rise in specialty trades and not civil engineering projects, McElroy said.

Manufacturing added 1,300 jobs in September, growing for a fourth consecutive month. A renewed burst in exports has helped the sector. Other sectors adding jobs were retail, transportation and utilities (up 1,400), manufacturing (up 1,300), information (up 900) and financial activities (up 200).

"September's employment picture is a reminder that economic recoveries are uneven," McElroy said. "Goods-producing industries showed particular strength in September."

Average workweek increases

In another piece of good news, officials noted that the length of the average workweek increased by nearly an hour in the past 12 months. The average grew from 32.2 hours in September 2009 to 33.1 hours in September 2010. "This equates to about 60,000 full-time employees," McElroy said.

Over the past 12 months, private sector employment rose 33,000, while service industries added 24,400 jobs. Goods-producing industries have added 3,400 jobs over the year, the first gains since March 2006.

Minnesota has added 27,700 jobs since September 2009. These year-over-year gains occurred in education and health services (up 13,400), professional and health services (up 10,400), leisure and hospitality (up 9,000), manufacturing (up 8,700), trade, transportation and utilities (up 2,300), information (up 2,200), and logging and mining (up 500).

Job losses in the past 12 months occurred in "other services" (down 6,800), construction (down 5,900), government (down 5,200) and financial activities (down 900).

Meanwhile, the U.S. Department of Labor reported Thursday that seasonally adjusted initial jobless claims were 452,000 for the week ended Oct. 16, a decrease of 23,000 from the previous week's revised figure of 475,000. The four-week moving average was 458,000, a decrease of 4,250 from the previous week's average of 462,250.

Dee DePass • 612-673-7725