Oregon unemployment, stuck again at 9.6 percent in September, would be better if not for job cuts by state and local governments.

The state's private sector is hiring -- 31,900 workers since September 2010 -- although strong employment growth late last year and early this year has slowed as the economy sputters. But the government sector, suffering from tax revenues diminished by the recession, has shed 7,900 jobs, holding back broader economic recovery.

The opposing trends popped out of the

by Oregon officials. The same split is occurring nationally, as local governments shed unprecedented numbers of jobs.

"I'm afraid this will continue at least through the middle of next year,"

said. "And folks in the public sector are less prepared to be laid off, so they may be unemployed for a long time."

Shrinking local-government payrolls are just one drag on a precarious national economy that experts believe could reenter recession, given another shock or two. The economy weathered hits from surging commodity prices and supply disruptions from Japan's tsunami. But Europe's debt crisis, jittery financial markets and reduced federal spending are retarding recovery and could turn south to derail the economy again.

In Oregon, local government cutbacks are particularly pronounced because public finances depend heavily on property tax and personal-income tax revenues, which are down from the recession. Capital-gains tax revenues also fell, and many school districts found themselves paying more to fund retirements, said David Cooke, an Employment Department economist.

Private-sector job cuts in sectors such as construction came early in the recession, which began in December 2007 and ended in June 2009. But local governments feel the pain later and react later as lower tax payments arrive, forcing cities and school districts to cut jobs.

"Over the last three recessions in Oregon, government employment lagged the private-sector trend by about 18 months," Cooke said. This time, he said, federal stimulus funds kept many public-sector workers employed longer, but then dried up.

Teacher layoffs cause ripple effects, especially in local communities, where school districts are often the largest employers, said Becca Uherbelau, a spokeswoman for the

union. An Oregon study shows that every 10 school employees support nine jobs in other sectors, she said.

As the public sector shrinks,

is targeting the private sector for job growth.

"This is going to have to be a private-sector recovery," Kitzhaber said Tuesday after seeing September's numbers. "The public sector can't recover until the private sector recovers."

Kitzhaber said Tuesday his administration is preparing a new type of economic development plan, the

, which he'll bring to the 2012 Legislature. The strategy is designed to boost direct investment by combining Lottery and private resources.

The aim, according to

, is to bring more out-of-state capital into Oregon, boost financing for Oregon ventures, increase loans to expand businesses and improve conditions for starting companies and creating jobs.

Reduced public-sector employment is just one factor keeping Oregon's unemployment rate a half percentage point above the national 9.1 percent jobless level. The housing-market collapse hit the state especially hard, given Oregon's timber industry and construction boom. Manufacturing, another mainstay in Oregon, endured a long decline.

In September, Oregon lost 600 nonfarm payroll jobs, seasonally adjusted, following a revised gain in August of 1,200 jobs. In all, 1.6 million Oregonians had nonfarm payroll jobs in September, close to the number since March.

Leisure and hospitality gained 1,100 jobs in September, along with 1,400 added in "other services," a sector including repair, maintenance and membership associations. Trade, transportation and utilities lost 1,700, while professional and business services cut 1,000.

Oregon's

last month at 36,800. Tech employment has increased 7 percent from September 2010, the strongest annual growth since May 2001. But now as tech job growth slows, employment in the industry remains 13 percent below where it was five years ago.

Across all sectors, Oregon has fewer unemployed, at least by the official definition.

In September, 178,174 Oregonians were listed as jobless. That's 19,738 fewer unemployed workers than in September 2010, when 197,912 were jobless.

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