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RALEIGH (AP) — North Carolina's unemployment rate dropped almost imperceptibly in August from a month earlier, remaining close to 11 percent as more people became discouraged by the job market and stopped looking for work.

The state Employment Security Commission said Friday the unemployment rate was 10.8 percent, down only slightly from the 10.9 percent reported for July. The rate for August 2008 was 6.6 percent.

Seasonally adjusted employment decreased by 8,330 workers to 4,031,573. Unemployment decreased by 6,534 workers to 488,974.

Both employment and unemployment decreased for the first time this year. Typically, when unemployment falls, employment increases.

"What that tells me is that the discouraged worker effect is at work here," said William Hall, an economist at the University of North Carolina at Wilmington and senior economist with the Center for Business and Economics Service. "People looked for work, got discouraged and quit looking."

Employment decreased by 8,330 workers to just more than 4 million, while the number of people unemployed decreased by 6,534 to 488,974, the ESC said.

"It's going to have an impact on consumer confidence because people aren't as optimistic about finding work as they were in the past because if they were, they'd still be looking for work," Hall said.

The August rate marked a seventh consecutive month the number hovered above the previous historic high. Before this year, the state's highest unemployment rate was 9.7 percent in March 1983, a level matched in January.

As he paced outside an ESC office in Raleigh, Reddick Patrick said he was seeking a status update on an unemployment claim he filed after losing his hotel job in July.

Although the 21-year-old recently found a job at a wireless store in Cary, he's still hoping to be compensated for the time he was looking for work. He said he's proud that he was able to find work so quickly.

"I made it a full-time job to find a job," the senior at Shaw University in Raleigh said. "That's the kind of guy I am."

At the same office, however, 27-year-old Star Brewer of Raleigh said she's had difficulty finding work since April, when she lost her job at a convenience store. The single mother said she's seeking similar work, but many employers want her to work late night shifts, an impossible situation because of her 6-year-old autistic son.

But Brewer remains optimistic.

"I have faith and hope in God that he will lead me to the right job," she said.

North Carolina's unemployment rate has hovered near 11 percent since February, when it hit 10.7 percent, and hasn't changed more than a few percentage points since then.

The state topped the national rate for August, which was 9.7 percent. The ESC said that since the recession began in December 2007, unemployment has increased more than 116 percent in the state, compared with 98 percent nationwide.

However, the ESC said the number of initial claims for unemployment insurance in August was 82,299, a drop of 20,092 from a month earlier. Of those August claims, more than half were "attached" to a payroll, meaning the workers expected to be recalled to their jobs.

"Unemployment is continuing to rise, but it's rising less rapidly," Hall said. "It continues to be severe, but it's not as severe. That doesn't do you much good if you're unemployed."

In addition, government jobs rebounded, adding 20,100 jobs for a 2.9 percent increase. Most of those jobs were in education and those jobs likely were the result of public schools laying off employees, then rehiring them after the Legislature passed a budget.

In July, local governments issued more pink slips than any other field, cutting 22,600 jobs.

Since this time last year, unemployment has increased by 189,252 people. Employment is down by 217,761 workers since August 2008.

The state rate in August 2008 was 6.6 percent.

Rates by county will be released Sept. 25.

Associated Press writer Barbara Rodriguez contributed to this report.