Analysts said while there are some signs of growth in the private sector, local governments continued to shed workers. Layoffs of public workers has been the big story the past two months.
July marked the first month the state's $19.7 billion 2011-12 budget took effect, and the spending plan included planned layoffs throughout state government.
Nationwide, unemployment rates rose in a majority of states in August for a third straight month, further proof that job growth is weak across the U.S.
The Labor Department says unemployment rates increased in 26 states. They fell in 12 and remained unchanged in 12.
Nevada had the nation's highest unemployment rate among states at 13.4 percent. It rose from 12.9 percent in July.
North Dakota had the lowest unemployment rate, at 3.5 percent. That's up from 3.3 percent in July.
Nationwide, hiring fell significantly in August. The economy added no new net jobs, and the unemployment rate stayed at 9.1 percent for the second straight month.