Ellington

JACKSON, Miss. (AP) — Mississippi's unemployment rate fell by a half percentage point to 8.5 percent in July, hitting lowest level in more than four years, but only because the state's labor force shrank.

A separate survey showed state employer payrolls fell slightly.

Both sets of figures — adjusted to cancel out normal seasonal changes — were released Monday by the federal Bureau of Labor Statistics.

It's the lowest state jobless rate since February 2009. Mississippi's unemployment rate was 9 percent in June and 9.3 percent in July 2012.

The labor force fell by 10,000 people, dropping below 1.3 million for the first time since 2010. That translated into 3,000 fewer people reporting they had a job, but 7,000 fewer reporting they were unemployed. The bigger decrease in the unemployed is what pushed down Mississippi's jobless rate to a level equal to the early part of the recession.

Mississippi had 110,700 unemployed people in July, down from 117,800 in June, and 124,000 in July 2012.

The dip also drove Mississippi down from its June ranking of third-worst state for unemployment. It's now tied for ninth among the states with Tennessee. Nevada retained the nation's worst jobless rate at 9.5 percent, while North Dakota was again lowest at 3 percent.

The national unemployment rate dropped to 7.4 percent in July from 7.6 in June. It was also below the 8.2 percent level of July 2012.

The unemployment rate is calculated by a survey that asks how many people are looking for a job. A second survey each month asks employers how many people are on their payrolls, a measure many economists use as their top labor market indicator.

Mississippi's nonfarm payrolls fell to about 1.1 million people in July, down by 3,000 from June, but about 24,000 higher than a year ago. The decrease breaks a six-month string of payroll increases, which had suggested that the state's economy was gaining traction despite stubbornly high unemployment. Mississippi remains 3.3 percent, or 38,000 jobs, short of its all-time peak in February 2008.

The only sectors that increased payrolls in July were construction and education and health services. Shedding workers were trade, transportation and utilities; professional and business services; leisure and hospitality; financial activities; manufacturing and government.

The broadest measure of those who are unemployed averaged 15.8 percent in Mississippi during the 12 months that ended June 30, the most recent figures available. That underemployment rate includes not only those counted as jobless in the standard survey, but also people who are looking for work only sporadically, have given up looking, or are working part time because they can't find a full-time job.

Nationwide, that broad measure averaged 14.3 percent during the same time.

County-level rates will be released later.