Kentucky's unemployment rate fell to 8.4 percent in September from 8.5 percent a month earlier, the state announced Thursday.
"What is particularly reassuring is that the number of new jobs in Kentucky increased faster than the number of people entering the labor force," Manoj Shanker, economist with the Kentucky Office of Employment and Training, said in a statement. "The labor market is showing steady expansion."
National observers say the number of people in the labor force is expected to increase as the long-term unemployed once again begin looking for jobs. That's because the unemployment rate only counts people as unemployed if they've looked for a job in recent weeks.
Despite the decrease in Kentucky's jobless rate in August, the state continued to lag the national unemployment measure, which fell to 7.8 percent from 8.1 percent in August.
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During September, seven of the state's 11 major economic sectors reported employment increases, with the state adding 9,300 non-farm jobs.
Leading the gains were the trade, transportation and utilities sector, which saw growth of 7,500 jobs.
Shanker attributed the increase to growing consumer confidence.
"Optimism about the economy usually translates into greater spending and an increase in retail trade and warehousing employment, and that was the case in September in Kentucky as both of those areas added jobs," he said.
The leisure and hospitality sector, which includes such employers as restaurants and hotels, added 1,800 jobs.
The government sector grew by 700 jobs, while construction jobs increased by 600.
Other sectors seeing employment gains were professional and business services (400), financial activities (300) and information (100).
The largest losses came in manufacturing, which shed 2,000 positions, while the educational and health services sector dropped by 100 jobs.
"Surprising as it may seem, the declines in manufacturing employment, as well as in health services, are linked to the surge in temporary employment," Shanker said. "To cut costs in the face of stiff competition, key functions like payroll and custodial services have been outsourced from manufacturing companies and hospitals to support services companies.
"The jobs are still being performed, but they are now counted in a different category."
Employment was steady in the mining and logging sector, as well as the other services sector that includes repair businesses and religious organizations.