Hawaii's seasonally adjusted unemployment rate dropped to 7 percent in July, its lowest level since April as state and federal stimulus funds created jobs.

The state's unemployment rate, which hit a more than 31-year high in May of 7.4 percent and a revised 7.3 percent in June (lowered from the initially reported 7.4 percent), has been above 6 percent since January. The last time the jobless rate was higher than the past three months was in December 1977 when it hit 7.7 percent.

Last month, there were 645,450 people in the Hawaii labor force, with 600,150 employed and 45,300 still looking for jobs. While Hawaii's government, trade, transportation, utilities, and professional and business sectors gained jobs last month, jobs were cut from the educational and health services, leisure and hospitality, and financial activities sectors.

Likewise, the previously reported U.S. seasonally adjusted unemployment rate also declined to 9.4 percent in July from 9.5 percent during the prior month. For the past four months, Hawaii's monthly seasonally adjusted unemployment rates have been at least 2 percentage points lower than the national monthly rates.

However, Hawaii job hunters say living on an island compounds the challenges of finding work. The global economic slump has trickled down to nearly every industry in Hawaii's tourism-dependent economy. And Hawaii's unemployed cannot broaden their opportunities by commuting to the next big city or state to find work.

“;The general message is that it is positive to see unemployment decrease, but the reality of the situation is that a pretty high percentage of our private-sector folks are unemployed and we'd love to see some sustained decrease in unemployment,”; said Ryan Markham, spokesman for the state Department of Labor and Industrial Relations.

Bart Caballero, who formerly worked as a truck driver for Pepsi Cola, said he's been unemployed for 11 months and ran out of unemployment insurance about a week ago.

“;If the unemployment rate is getting better, how come the unemployment lines keep getting longer?”; said Caballero, who like many other unemployed individuals in Hawaii has begun dipping into his savings and investments to make ends meet.

While Caballero is avidly searching for a job, he said the search has been challenging.

“;I really hope the market gets better,”; Caballero said. “;It seems like everything got screwed up all at once.”;

State and federal stimulus money provided some job relief for Hawaii residents last month, Markham said.

A $2.9 million federal Workforce Investment Youth Activities grant helped some young people age 16 to 25 find government jobs, he said.

The school calendar also created some support jobs within the Department of Education, Markham said.

And the ramp-up in $1.8 billion worth of state capital improvement projects, as part of Gov. Linda Lingle's five-point economic plan, created jobs, he said.

“;Right now we are seeing the state stimulus create jobs for people like architects and planners and other professionals,”; Markham said.

As the projects get under way, Hawaii's hard-hit construction industry will gain jobs, too, he said.