Senator Eliot Shapleigh - El Paso, Texas

Texas employers cut payrolls by 24,700 nonfarm jobs in May, the Texas Workforce Commission said Friday. It was the state's seventh consecutive monthly job loss but the smallest decline of the year.

"We're at an inflection point," said Keith Phillips, an economist with the Federal Reserve Bank of Dallas' branch in San Antonio.

"Growth is going from very negative to less negative," he said. "If you look at both national employment data and Texas data, it went from huge declines to very bad declines, and that's an improvement."

That doesn't mean the economy is on the verge of roaring back. While Phillips predicted that job losses would slow in the coming months, he added that he didn't expect a labor market recovery until the second half of 2010.

The Texas unemployment rate jumped to 7.1 percent in May from a revised 6.6 percent the month before, according to the Texas Workforce Commission.

Waco economist Ray Perryman said he expected the unemployment rate to continue rising in the coming months, even though he is predicting that total economic output will start recovering in the second half of the year.

"I think the job losses will slow on a month to month basis, but I think it's going to be awhile until the job market has some momentum," he said. "There's a lot of slack in the economy and there's a reluctance to hire after a difficult time."

The May decline in Texas payroll employment followed a job loss of 47,500 in April, according to revised data released Friday.

The revised number was significantly higher than the preliminary April figure of 39,500 announced last month. Job losses during the first three months of the year averaged more than 52,000 per month.

Employment declines at the national level also appeared to slow in April and May compared with monthly declines earlier in the year. But analysts cautioned that the information is preliminary and subject to potentially significant revisions.

The Texas economy, while weak, remains somewhat healthier than the national average: The overall U.S. jobless rate last month stood at 9.4 percent.

Nationally, 13 states and the District of Columbia had unemployment rates of more than 10 percent in May, according to the U.S. Bureau of Labor Statistics.

The five states with the highest jobless rates were Michigan, at 14.1 percent; Oregon, at 12.4 percent; Rhode Island and South Carolina, both at 12.1 percent; and California, at 11.5 percent.

In May, Texas saw job losses across a range of industries.

Manufacturing lost 12,800 jobs, while construction shed 10,400.

Trade, transportation and utilities lost 8,900 jobs; mining and logging employment declined by 5,700; and the professional and business services sector, which includes temporary employees, lost 2,700 jobs.

"Few industries were spared in May as Texas employers continued to report job losses," said Tom Pauken, chairman of the Texas Workforce Commission. "Continued unemployment claims increased in Texas as well."

But some sectors added jobs last month. Education and health services added 5,800 jobs, the same number added by government. Employment in "other services" – which includes automotive, electronic and commercial repair and maintenance – grew by 5,200 jobs.

The unemployment rate in the Dallas-Fort Worth area, which unlike the state rate is not adjusted to reflect seasonal variations, rose to 7.1 percent in May. It stood at 6.6 percent the previous month and 4.6 percent in May 2008.

The Dallas-Fort Worth area has lost 62,500 jobs over the last 12 months, with employment falling at a faster rate in the Dallas area than in the Fort Worth area.

"We've experienced some of the downturn, but our downturn has been fairly shallow by national standards," said Terry Clower, a University of North Texas economist.

"I really have this sense that if we are not at the bottom, we are very close to the bottom," he said. "I think we are well poised to be one of the first regional economies to come out of this downturn, especially among the major metro areas."