"On the surface, Nevada's September labor market data painted a somewhat mixed picture, but a continuation of recent trends was evident," said Bill Anderson, chief economist for the department. "The state added jobs at a modest pace while unemployment rates remained on a slow upward climb."

The rise in the unemployment rate is due to the nationwide housing slump, he said. In addition, a large increase in the state's labor force contributed to the rise in unemployment in September.

The labor force grew by more than 17,000 in September, and again the state's slowing economy could not absorb all of the new workers, Anderson said.

The unadjusted unemployment rates in the state's three metropolitan areas each increased by two-tenths of a percentage point in September, to 5.2 percent in Clark County, 4.6 percent in the Reno area and 5.3 percent in Carson City.

With schools back in session, the Nevada economy added 9,000 jobs in September, but the nominal job gains masked weakness in two of the state's key industries. The construction and gaming sectors each dropped 1,200 jobs in September, and those two industries have lost a combined 7,700 workers since September 2006.

Department Director Larry Mosley said although the rising unemployment rate is reason for concern, there is still positive activity taking place in the economy.

"Despite weakness in two major industries and the loss of a net 700 jobs in September, Nevada's private sector as a whole has added more than 11,000 jobs in the past year," he said. "While the pace of job creation is well below recent norms, the private sector -- excluding the gaming and construction industries -- has produced jobs at a respectable 2.5 percent annual rate in the past 12 months. That rate compares favorably to the state's overall 1.3 percent job growth during the same period."