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Payrolls increased in 39 states in October, while the jobless rate dropped in 36 states, indicating the labor market is steadying across much of the nation.

Wisconsin posted the nation's biggest payroll losses, with employment dropping by 9,700 jobs in October compared with September, according to a U.S. Bureau of Labor Statistics report released Tuesday.

The bureau said Wisconsin was the only state with a statistically significant decline in employment, dropping from 2,757,200 jobs in September to 2,747,500 jobs in October. However, the state unemployment rate, which doesn't include jobless people no longer actively searching for new work, dropped to 7.7% from 7.8%.

Wisconsin saw a job increase in the leisure and hospitality sector, according to the bureau's seasonally adjusted data.

But there were declines in several other sectors: construction; manufacturing; trade, transportation and utilities; financial activities; professional and business services; education and health services, and government.

New York had the second-largest payroll loss, at 8,300 jobs. That might reflect cutbacks in the financial services industry, which is "in a very tough cost-conscious mode right now," said Steve Cochrane, director of regional economics at Moody's Analytics Inc.

Illinois led the nation with a 30,000 gain in jobs, followed by California with 25,700 jobs. Virginia, Pennsylvania and Washington rounded out the top five states with the biggest gains.

"Every region of the country seems to be in some stage of economic recovery," Cochrane said. "The improvement in employment is fairly uniform. The factors holding back bigger increases are broad-based issues of business confidence, uncertainty about the U.S. deficit and difficulties in Europe."

A congressional committee failed to reach agreement Monday on cutting the nation's budget deficit, raising the prospect of automatic cuts in 2013, while European leaders are running out of options to solve the debt crisis. U.S. employers added 80,000 workers in October, the fewest in four months, indicating it may take time for consumer spending to pick up.

Payrolls in Virginia climbed by 14,000, in Pennsylvania they rose by 13,800, and Washington showed an 11,700 gain. The number of states gaining jobs was the most since April, when 41 states saw an increase.

The unemployment rates in Alabama, Michigan and Minnesota dropped by half a percentage point each in October, marking the biggest declines.

Nevada's jobless rate of 13.4% remained the highest in the United States, followed by California at 11.7%. North Dakota had the lowest unemployment, holding at 3.5%.

There have been some signs in recent weeks that the economy and hiring may pick up soon. The number of people seeking unemployment benefits fell to a seven-month low last week. Retail sales also grew at a healthy pace in October.

The economy expanded at a 2% annual rate in the July-September quarter, the Commerce Department said Tuesday. That was below an earlier estimate of 2.5%. But the drop was mostly because companies cut back on their stockpiles of goods, probably because they expected consumer and business demand to slow.

If demand remains steady, businesses may have to boost inventories in the current quarter, leading to stronger growth. Many economists forecast growth will accelerate to about 3% in the October-December quarter.

Tom Daykin of the Journal Sentinel staff and The Associated Press contributed to this report.