New Mexico in January had the largest unemployment rate increase in the nation, according to the U.S. Labor Department.

While the jobless rate statewide hit a 22-year high, statistics compiled by the New Mexico Department of Workforce Solutions indicate the Santa Fe labor market, at least, appears to be showing some signs of improvement.

New Mexico's seasonally adjusted unemployment rate was 8.5 percent in January, up from 8.2 percent in December.

That three-point jump was the biggest of any state's, the U.S. Labor Department said, but left New Mexico still below the national average of 9.7 percent.

"The recent decline in the number of jobs is the worst the state has seen in modern times," said the state Labor Market Review released Thursday. "Unlike previous national recessions, this downturn has impacted New Mexico nearly as much as it has the nation as a whole."

New Mexico's unemployment rate may go higher in 2010, the report said. Only three of 13 industry sectors posted any job growth since last year.

State labor officials say New Mexico's economy has been on a downward trajectory since job growth peaked at 3.5 percent in June 2006. Job growth bottomed out last fall at negative 4.9 percent and now stands at negative 3.3 percent.

As for Santa Fe County, the seasonally adjusted unemployment rate for January 2010 was 7.7 percent, up from 7.1 percent in December. A year earlier the rate was 5.5 percent.

Employment growth from December to January was weak, as is typical for Santa Fe in January. Work-force reductions resulted in 900 fewer jobs. Government lost the most jobs, with the local and state sectors declining by 300 and 100, respectively.

Over the year, comparing January 2010 with January 2009, the Santa Fe job market was weak but appears to be improving, the report said: "Three industries have reported job gains from last year. Leisure and hospitality was up 600 jobs, and educational and health services and miscellaneous other services both had small gains."

Government employment in Santa Fe was flat, with both the federal and state government sectors up slightly while local government was down.

The largest employment drop was, to no one's surprise, in construction, which lost 700 jobs, a 20 percent decline from last year.

Also weak were professional and business services and information, wholesale trade and manufacturing.

Three other industries — transportation, warehousing and utilities — reported the same number of jobs as last year.