Nevada's Employment, Training and Rehabilitation Department reported the statewide unemployment rate increased 0.5 percentage points in May, from 5.7 percent to 6.2 percent.

This is the largest month-over-month change for the state's unemployment rate, said Jered McDonald, an economist for the department's research and analysis bureau.

"It's the biggest we've seen," McDonald said. "It's a pretty big jump.

"Things are getting pretty bad."

SOURCE: Nevada Employment, Training and Rehabilitation Department's research and analysis bureau.

In January, the rate went up 0.3 percentage points, he said, although typically the department sees increases or decreases of 0.1 or 0.2 percentage points.

"Nothing quite like this," he said.

Nevada's unemployment rate for last month is higher than the national unemployment rate in May, reported at 5.5 percent, according to the Labor Department.

The last few years, Nevada's numbers have matched, or were below, nationwide numbers, McDonald said.

UNLV economist Keith Schwer said that although the statewide unemployment rate has been higher at times, the increase is significant in that "it's just one more piece of evidence that we have that the economy is in a downturn."

"Things are slowing down," Schwer said. "I don't think we're going to fall off the face of the Earth ... I think it's rather we're in a recession, and it looks like it will be mild."

The increase in Nevada's unemployment rate is caused by a nearly simultaneous collision of housing excess, tight credit markets and sharply increased fuel prices.

The state's saving grace is ongoing construction and investment on the Strip.

"If we didn't have that, we would have a much more serious situation," Schwer said. "The unemployment rate has been a lot higher," he said, referring to the 1990s recession.

Payments out of the state's unemployment trust fund are up significantly, McDonald said.

April had the highest payout in unemployment checks, he said.

Construction job losses were responsible for the highest percentage of unemployment claims, he said, followed by office and administrative support, food preparation, sales and related fields, and management, he said.

In October, when the state's unemployment rate was 5.1 percent, the state cut employers' contributions to the employment insurance tax, the funding source for unemployment payments. The tax was reduced to 1.33 percent from 1.38 percent, with a projected loss in revenue of $12 million.

At the time of the cuts, the state projected the fund would reach $800 million by the end of 2007. At the end of March, the fund was worth $733 million, McDonald said, 8.4 percent less.

The state is looking at a much lower end balance than originally projected, he said.

"It's gotten decidedly worse than we had projected last September," McDonald said.

Through the end of March, the state's unemployment trust fund was $26.9 million below solvency, McDonald said, but it's not something the state doesn't expect during a slow economy.

The state's solvency requirement that it tries to build up to is based on the level of covered employment and average weekly benefit payments, he said.

Instead of raising employers' contributions in response to the rising unemployment rate, McDonald said the state will let the fund pay out. It's in times of economic prosperity that the state builds up the fund, he said.

Until unemployment numbers in early fall are available, it's difficult to tell if this latest increase is the start of a downward job trend.

"It shows that we've got a lot of people hitting the job market looking for jobs that just aren't there," McDonald said. "It's hard to say: Is this a new level? Are we going to go up from here or down from here? It's too early to tell."

Nicole Lucht covers health care, workplace and banking issues for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached at 259-8832 or at nicole.lucht@lasvegassun.com.