Kentucky's unemployment rate dropped to 8.1 percent in December from 8.2 percent in November, the state announced Thursday.
The state continued to lag the national unemployment measure, which stayed steady at 7.8 percent in December.
In December 2012, Kentucky's civilian labor force was 2,091,629, an increase of 6,142 people compared with the previous month. Employment, however, grew even faster, with 6,961 additional jobs.
"The expansion of the labor force means people are re-entering the job market because they see opportunities," Manoj Shanker, economist with the Kentucky Office of Employment and Training, said in a statement.
Kentucky's leisure and hospitality sector grew by 1,100 jobs in December 2012, according to the Office of Employment and Training. Since December 2011, the sector has expanded by 7,700 positions. This sector includes arts, entertainment, recreation, accommodation and food services.
Other gains included 500 new jobs in the educational and health services sector, 400 jobs in the information sector and 200 jobs in the financial activities sector.
Kentucky's manufacturing sector lost 800 jobs in December 2012 compared to the previous month, according to the state report. Since December 2011, employment in manufacturing has increased by 1,400 jobs.
The professional and business services sector, which has grown steadily in recent years, saw employment decline by 1,400 jobs.
"The recent decline is in temporary services, which may indicate that employers added more staff than necessary in the fall and are now being more cautious," Shanker said.
Employment in the construction sector fell by 1,100 positions, while jobs in the government sector declined by 800.
Separately, a federal survey of businesses, excluding farm work and the self-employed, showed that Kentucky's seasonally adjusted nonfarm employment decreased by 4,400 jobs in December 2012 from the previous month.
According to that report, the largest losses came in the trade, transportation and utilities sector, which shed 2,400 jobs.