Senator Eliot Shapleigh - El Paso, Texas

Texas employers slashed payrolls by 40,600 jobs in June, the Texas Workforce Commission said Friday, as net job losses accelerated after slowing in May.

The state unemployment rate rose to 7.5 percent in June, its highest level since January 1993. Still, Texas' jobless rate stood 2 percentage points below the national rate of 9.5 percent.

Waco economist Ray Perryman said the numbers were disappointing but not surprising, as the national economy continues to slog through the deep recession.

"I think you'll see it begin to turn around a little bit in the next few months," he said. "But by 'turn around' I simply mean that you'll see the net losses being smaller numbers, not that you'll actually see any job gains for several more months."

The latest job losses came as state officials struggle to meet the needs of the unemployed. The state's unemployment insurance fund is expected to run out of money next week, forcing Texas to borrow from the federal government.

Moreover, Texas Workforce Commission officials announced this week that they would indefinitely postpone a 13-week extension of unemployment benefits for those who have been out of work for a little more than a year.

But Texas Workforce Commission Chairman Tom Pauken and Gov. Rick Perry said Friday that the agency would get the extended benefits program up and running by the end of the month.

The June decline in payroll employment was deeper than the loss of 27,300 jobs in May. Monthly job losses averaged more than 51,000 between January and April.

Last month, the trade, transportation and utilities category, which includes the retail business, shed 21,700 jobs. Payrolls shrank by 11,900 jobs in professional and business services.

Manufacturing employment fell by 10,300 jobs, while the construction industry shed 10,200 jobs.

Government employment jumped by 19,300 jobs. Employers added 1,000 jobs in financial activities and 900 jobs in leisure and hospitality. Employment in education and health services was flat.

In the Dallas-Fort Worth area, the jobless rate jumped to 8.2 percent from 7.1 percent in May. Unlike the state unemployment rate, the local rate is not adjusted to reflect typical seasonal variations.

Over the last 12 months, the Dallas-Fort Worth area has suffered a net loss of 58,300 jobs. Excluding public sector employment, the situation has been even worse as the area lost 69,800 private-sector jobs.

The U.S. recession began in December 2007, but Texas managed to stay out of it until late last year. During the first six months of this year, however, the state's payrolls shrank by 2.6 percent – similar to the 2.5 percent decline for the nation as a whole.

Texas has lost 272,500 jobs this year so far, and analysts say the next few months will bring additional losses.

"We didn't go into the recession as fast as the rest of the country, but the longer the recession drags on, the more Texas is going to feel it," said William Wallace, a University of North Texas economist and former Federal Reserve official.

Still, Texas' jobless rate remains far below the levels seen in many other states. Last month, 15 states and the District of Columbia had unemployment rates above 10 percent.

Michigan had the highest unemployment rate in the country, at 15.2 percent. According to the U.S. Bureau of Labor Statistics, the last state to log a jobless rate of 15 percent was West Virginia – in March 1984.

Last month, Rhode Island's jobless rate was 12.4 percent, Oregon's was 12.2 percent, South Carolina's was 12.1 percent and Nevada's was 12 percent. California's unemployment rate was 11.6 percent.

Texas is still "doing better, I think, than most of the rest of the national economy," Wallace said. "I really firmly believe that by the end of this year we will be convinced that the economy is recovering, although unemployment may still be looking pretty bad."