The number of unemployed Coloradans surged in October as businesses in the financial, manufacturing, construction and other sectors trimmed payrolls.

Although Colorado continues to fare better than the rest of the country, the state is feeling the pain as consumers and businesses cut back sharply.

"Colorado is not an island," said Alex Hall, chief economist with the state Department of Labor and Employment. "We cannot keep bucking the trend."

A worsening economy snapped Colorado's string of 25 consecutive months of job increases. Even the broad employment category that includes lawyers, engineers and accountants, which had been one of the economy's strengths, sustained a decline last month.

Among the Colorado companies to announce layoffs recently are ProLogis, MDC Holdings, Janus Capital and Western Union. Sun Microsystems, which operates a large Broomfield campus, plans up to 6,000 job cuts.

Colorado's jobless rate increased to 5.7 percent in October, the highest level in more than four years. That compared with an unemployment rate of 5.2 percent in the prior month and 3.9 percent in October 2007.

Denver Mayor John Hickenlooper, giving a speech at an investment conference on Friday, said "we're seeing a lack of trust right now," as people stuff money under mattresses and banks show an unwillingness to lend.

Hickenlooper went on to deliver an upbeat message, although he acknowledged Coloradans who have lost their jobs may not want to hear it and that "sometimes it seems impossible" to have confidence in the economy.

"The truth is our optimism will be the road through this," he said at the Rockies Venture Club's Angel Capital Summit. "Whether you're getting your kitchen redone or beginning a new business, there hasn't been a better time in the last eight years than right now."

Hickenlooper, who turned an empty warehouse into the Wynkoop Brewery after being laid off as a geologist earlier in his career, noted that tough times can lead to "tremendous opportunity."

Still, as the mayor noted, it may be hard for many Coloradans to embrace a positive outlook.

The number of people unsuccessfully looking for work climbed to nearly 156,000 in October from 107,000 a year ago as state businesses scaled back.

After a streak of job gains going back more than two years, Colorado in September and October experienced a drop in the number of jobs from the previous months.

The state declared Thursday "Keep Colorado Working Day" and set up regional job fairs.

It could be a lot worse.

Michigan and Rhode Island, for example, reported jobless rates of 9.3 percent last month, significantly higher than the national rate of 6.5 percent.

In one positive sign, Colorado managed to create a modest number of new jobs compared with October 2007 levels. Colorado added 11,700 positions over the period, a 0.5 percent gain. The energy, educational and health services and government sectors recorded increases, offsetting job losses in other areas.

The financial sector lost 2,600 positions in October compared with a year ago, and construction shed another 6,200 jobs. Professional and business services had its first decline in five years, slicing payrolls by 2,100.

Job growth has slowed considerably from more than 2 percent at the start of the year.

A strong energy sector, a resilient aerospace industry and a housing market that has held up better than most have contributed to Colorado's outperformance.

The fact that Colorado's economy has continued to expand by that measure at a time when experts believe most of the country is in a recession has been heartening, but some economists fear the state may not be able to stay in positive territory for much longer.

A recession and year-over-year employment declines in Colorado are "distinct possibilities" between now and the end of the year, said the economist Hall.

Originally published by James Paton, Rocky Mountain News.

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