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State unemployment picture brightens

By Blake Ellis, staff reporterMarch 10, 2010: 1:39 PM ET

NEW YORK (CNNMoney.com) -- A total of 30 states and Washington, D.C., reported rising unemployment rates in January, down from the number in the previous month, according to a government report released Wednesday.

Jobless rates decreased in nine states, according to the Labor Department's monthly report on state unemployment. Eleven states reported no change.

Twenty-five states posted jobless rates lower than the national unemployment rate of 9.7% in January. Eleven states and Washington, D.C., reported rates higher than the national average, down from 17 states and Washington, D.C. posting rates higher than the national average of 10% in December.

The report said all 50 states had an unemployment rate in January that was higher than a year earlier.

"On balance, the report still reflects a very weak labor market," said John Lonski, a chief economist at Moody's Economy.com. "Unemployment remains unacceptably high throughout the far majority of states, and despite hints of an improving employment picture, we have a long way to go before the U.S. economy achieves a satisfactory labor market."

Michigan again had the highest rate of unemployment at 14.3%. Second was Nevada at 13%, followed by Rhode Island at 12.7%. For South Carolina, fourth at 12.6%, and California, fifth at 12.5%, the January jobless rates were record highs.

New Mexico posted the largest jobless rate increase in January, a rise of 0.3 percentage point to 8.5%.

North Dakota was again the state with the lowest jobless rate, at 4.2%.

Some 31 states and Washington, D.C., added jobs in January, according to the Labor Department. The District of Columbia led with a 32,500 increase, followed by Illinois with a 26,000 gain.

Lonski expects there will be a gradual decrease in the unemployment rate throughout the year, but he cautions that there's no reason to celebrate yet.

"What you can infer from this month's report is that the deterioration in the market eased in January, but easing is not the same thing as an outright improvement," he said. "Forthcoming declines in the unemployment rate will occur grudgingly -- it's unlikely that the unemployment rate is on the verge of declining significantly."

Lonski said he wouldn't be surprised if state unemployment rates fall modestly in the spring and especially in March, when the government begins hiring temporary Census workers. Warmer weather may also slightly improve the employment landscape, as employees who were let go in the winter months return to work.

In a separate report earlier this month, the government reported the nation shed 36,000 jobs in February, following a 26,000 loss in January. The unemployment rate held steady at 9.7%.

"It's still not a very pretty picture," said Lonski. "And to go ahead and assume that the U.S. will grow rapidly enough to lower the rate of unemployment later this year remains, in part, an act of faith."

The Labor Department generates the unemployment rate by conducting a monthly population survey and includes in the rate people who have actively searched for work in the past four weeks.

Those who have given up on finding jobs are not counted in the unemployment rate, and the rate is not affected by the number of people who are eligible for, or have run out of jobless benefits.