March's unemployment report was celebrated by economists as showing the most job growth seen in three years. But not all states were popping the champagne. Some saw their labor markets worsen. In fact, 32 states had more unemployed residents in March than in February, according to the Bureau of Labor Statistics. This may begin to show that the labor market recovery will not be felt equally by all states.

The five worst states were Michigan (14.1%), Nevada, (13.4%), California (12.6%), Rhode Island (12.6%), and Florida (12.3%). Of those five, Michigan and Rhode Island experienced job growth; the other three endured more job losses. North Dakota, South Dakota, and Nebraska remained the only three states with unemployment rates below 5%. North Dakota actually saw its rate decline by 0.1% to 4.1%.

California had the greatest number of additional unemployed residents with 30,500 more in March. It was followed by Virginia and Florida with 9,100 and 8,400 more, respectively. New York showed the most positive change with 12,700 fewer unemployed residents.

In terms of worsening unemployment rates, the most negatively affected states were Colorado, Nevada, Virginia, Montana, and New Mexico. All five saw their rates increase by 0.2%. 19 states had a 0.1% rise. Louisiana saw its rate decline the most, by 0.4%. South Carolina and the District of Columbia each enjoyed a 0.3% decline in their unemployment percentages.

The following chart shows the top-20 states with the highest increase in unemployment rate for March from February (#s in thousands):

top 20 unemployment sts 2010-03 v2.PNG

That last column is revealing: it shows each state's ranking in March foreclosure severity (foreclosures per housing unit). Six of the 10 worst states are on this list. The column also shows that only two of the 10-best states in terms of foreclosure severity are listed. If you compare the rankings of all 50 states for foreclosure severity and unemployment rate increase, they have a positive correlation of 0.31. While that's not terribly compelling at this point, the correlation should be watched over the next few months to see whether ailing local housing markets weigh on states' job market recovery.

Note: All statistics are seasonally adjusted.