Unemployment rate falls in 39 states: report

WASHINGTON (Reuters) - Unemployment fell but employer payrolls shrank in a majority of U.S. states in June as discouraged workers stopped looking for jobs, a government report showed on Tuesday.

The unemployment rate fell in 39 states and rose in four others, including Nevada, where the jobless rate reached a record high. Payrolls fell in 27 states.

The Labor Department report on state employment came as the Senate appeared poised to extend long-term unemployment benefits.

Employer payrolls decreased in 27 states, increased in 21, and stayed the same in 2 states, adjusting for seasonal effects, the government said.

Payroll data measures jobs gained or lost, while the unemployment rate shows the number of people looking for jobs.

Nevada, home state of Senate Majority Leader Harry Reid, reported an unemployment rate of 14.2 percent, a jump from 14.0 percent last month and its highest-ever reading.

In Michigan, the jobless rate fell to 13.2 percent from 13.9 percent -- the nation's second highest.

"The June jobless rate decline was primarily due to fewer Michigan workers active in the job market," the Michigan Department of Energy, Labor, and Economic Growth said.

Unemployment stayed flat in six other states, the government said. North Dakota reported the lowest rate at 3.6 percent.

In Georgia, the unemployment rate declined to 10.0 percent from 10.1 percent, and the number of payroll jobs fell.

"Georgia's job market is showing signs of renewed deterioration," State Labor Commissioner Michael Thurmond said. "A sharp increase in the number of discouraged workers, rising long-term unemployment, increased new layoffs, and anemic job growth suggests that the fledgling economic recovery may be losing steam."

New Mexico state payrolls were down 1.4 percent, the largest decrease.

In June, the national unemployment rate declined to 9.5 percent from 9.7 percent. Employer payrolls dropped by 125,000, reflecting a decrease in the hiring of temporary U.S. Census Bureau workers.

People who have been out of work for more than 26 weeks made up 45.5 percent of Americans looking for work.

U.S. President Barack Obama yesterday urged Congress to extend unemployment benefits for the long-term jobless.

Democrats tried to extend the benefits when they expired at the end of May, but Republicans objected to financing them by increasing the deficit.

(Reporting by Emma Ashburn; editing by Jeffrey Benkoe)