Hawai'i's unemployment rate surged to its highest level in more than a quarter century in January as a troubling economic downturn continued to wipe out jobs.

The jobless rate zoomed to a seasonally adjusted 6.1 percent, the highest level for the state since April 1983 — and may go higher in coming months, economists said.

The preliminary unemployment numbers released yesterday confirm the state's ongoing economic contraction as it suffers like the rest of the nation from a recession and financial crunch. The report showed joblessness more than doubled over the past year from the 3 percent reached in January 2008 and that over a year's time, the local economy had lost more than 20,000 jobs.

"There are many sectors that are seeing 2 to 3 percent declines in jobs," said Carl Bonham, executive director of the University of Hawai'i Economic Research Organization. Bonham, who has forecast a decline in construction jobs, said it's likely unemployment will deepen further this year.

"That's a pretty safe bet."

Hawai'i's rate has risen steadily in recent months, but remains below the 7.6 percent national average for January. And while ballooning by 1 percentage point between December and January, all states and Washington, D.C., registered increases during the month and Hawai'i's rate was the 15th-lowest nationally.

Among states, Michigan again had the highest rate at 11.6 percent, with Wyoming the lowest at 3.7 percent.

California, a big market for Hawai'i's visitor industry, was one of four states with double-digit percentage joblessness. Its unemployment rate weighed in at 10.1 percent.

MORE COMPETITION

For people out of work the going remains tough, with fewer job openings and more competition for positions that do open up. Honolulu resident Lorna Eugenio has looked for a job since December when poor sales began cutting into the operations of a shoe store where she held a supervisory position.

"It's really tough," said Eugenio, 42, who has experience in sales management and training as well as account management.

"Whenever I go to an interview there's always more than one person there. That's surprising; I've never had that happen before."

Given the tough economy, Eugenio said it may be May or June before she finds a job.

"I'm doubtful even then about that," she said.

Eugenio may be luckier than other out-of-work people elsewhere in the state. O'ahu's unemployment rate of 5.2 percent was the lowest of all the major islands.

Kaua'i's rate almost tripled over the past year to 8.8 percent from 3 percent in January 2008.

The rate more than doubled for the Big Island and Maui, which had rates of 8.4 percent and 7.4 percent, respectively.

Moloka'i continued to have the highest unemployment at 12.5 percent, while Lana'i came in at 8.5 percent. Unemployment rates for individual islands are not adjusted for seasonal variations.

The number of people without work in Hawai'i surged to 39,550 in January. A year earlier, the number was less than half that at 19,750. During January Matson Navigation Co. announced it was laying off 60 nonunion workers, while Banana Republic closed down its flagship store in Waikiki and Macy's closed down a resort shop on the Big Island.

Gov. Linda Lingle announced yesterday that she's trying to provide more help for the unemployed by applying for $7.7 million in federal stimulus grants for employment services and training. The state expects to receive the money next week.

"The funds will enable the Hawai'i Department of Labor and Industrial Relations to build on its partnerships with the counties, the private sector, labor unions and nonprofit organizations to enhance job assistance and employment training services," Lingle said in a press statement.

The money will go to youth and adult service programs. There will also be money for dislocated worker training and employment programs, along with funds for re-employment services for people applying for unemployment benefits.

QUALITY APPLICANTS

Indications of higher unemployment also are showing up at companies that aren't having a tough time in the current economic environment. At Menehune Water Co. the situation is such that highly qualified people walk in off the street to inquire whether there are openings, said Patrick Sheather, who helps run the company.

Sheather said Menehune Water started getting more applicants and better qualified applicants around the time Aloha Airlines went out of business. Aloha's March 31, 2008, shutdown stunned the state and was the first of several high-profile layoffs that stung Hawai'i's economy in the past year.

Sheather said he's seeing a higher number of motivated applicants with good work records responding to help-wanted advertisements and that he's getting resumes from all over the country.

"It never stops," he said. "We get a lot of walk-ins and a lot of e-mail and faxes."