New Mexico led all other states in the decline of its unemployment rate last month — a drop of 1.9 percentage points to 6.6 percent, but that doesn't mean more people are working.

The state now has the 11th lowest official unemployment rate in the country, according to The U.S. Bureau of Labor Statistics. The national unemployment rate is 9.1 percent.

The drop from August 2010 blew past the few other states that saw a significant decline — Oklahoma, where the rate dropped 1.4 percentage points to 5.6, and Indiana, where it dropped 1.3 percentage points to 8.7.

Though the state has returned to job growth, most of the decline is still a result of frustrated workers who are no longer seeking employment, according to the New Mexico Department of Workforce Solutions.

"This drop was again the result of workers leaving the workforce rather than an increase in employment," said an analysis by the Department of Workforce Solutions this week.

The unemployment rate — which peaked for New Mexico at 8.7 percent in January 2011 — measures the size of the labor force, people who are actively looking for work. So as people age and collect Social Security, return to school or just stop looking for a job, they are not counted as a worker. For instance, there are 4,277 fewer people working in the state than a year ago. And the civilian labor force in New Mexico has declined 2.7 percent from 3 years ago.

Economists say if the overall labor force had remained steady at pre-recession levels, the "measured unemployment rate would have continued a slightly increasing trend in recent months instead of posting the sharp drop shown by the official numbers," according to Workforce Solutions.

But there are some hopeful signs for New Mexico: For the first time since mid-2008, the state has seen three consecutive months of job growth when compared with a year earlier.

• 2,400 jobs were added in June

• 3,500 jobs were added in July

• 6,500 jobs were added in August

Much of that has been powered by health care and education as well as retail trade and mining.

One drag on the recovery has been the government sector. Statewide, there are 1,600 fewer government employees than a year ago.

In Santa Fe County especially, "the government sector continued to be a drag" in August, said state economists. Employment in August was down 600 jobs or 3.6 percent over the year, with losses split evenly among federal, state and local jurisdictions.

The loss in public-sector jobs around Santa Fe wiped out the 500 private-sector job gains — most of those in health-care, education, retail trade, finance and hospitality.

Contact Bruce Krasnow at 986-3034 or brucek@sfnewmexican.com.

Largest jobless rate decreases from August 2010 to August 2011:

New Mexico: -1.9 percentage points

Oklahoma: -1.4

Indiana: -1.3

Oregon: -1.1

Florida: -0.9

SOURCE: U.S. BUREAU OF LABOR STATISTICS