Oct. 1--Big losses in what's usually the Richmond economy's most stable sector -- government -- hit the area's job market hard in August, Virginia Employment Commission figures show.

More than half of August's month-to-month drop in employment came in government, accounting for 1,800 of 3,100 lost jobs.

However, college students' return to classes took enough people out of the work force to bring the Richmond metropolitan area's unemployment rate down.

The region's jobless rate fell to 7.7 percent in August from 8 percent in July. It was 4.6 percent in August 2008. The number of unemployed fell by 2,450 to 49,690.

"This recession has hit Richmond much harder than usual," said William F. Mezger, the employment commission's chief economist, pointing to layoffs of thousands this year when some of the area's biggest employers, including Circuit City Stores Inc. and Qimonda, closed their doors.

So far, though, he doesn't think many have become so discouraged that they've stopped looking for work and are no longer included in the work force.

Despite this year's blows, Richmond is tied for seventh place among metropolitan areas with the lowest unemployment, with Baltimore, Minneapolis-St. Paul and New Orleans, Mezger said.

Budget cuts likely accounted for much of the 2.1 percent drop in state government employment and 1.5 percent drop in local government from July to August, Mezger said. Some, though, reflects the usual summertime job losses as school systems' cafeteria workers, support staff and bus drivers are temporarily out of work.

But compared with last year, state government employment is down 3.9 percent, nearly as much as the private sector's 4.1 percent drop. In September, Gov. Timothy M. Kaine announced the additional layoffs of nearly 600 state workers.

Hotel, motel and leisure sector employment also dropped sharply from July to August, posting a 1.6 percent decline. It is down 9.1 percent from last year.

On the plus side, construction employment rose 0.8 percent between July and August, probably buoyed by work at Fort Lee, Mezger said. It is still down 13.4 percent from last year, however.

The local data are not seasonally adjusted.

The Richmond area's new claims for unemployment benefits declined to 4,626 in August from 5,489 in July.

The Richmond metropolitan area includes 20 cities and counties, ranging from Caroline County in the north to Sussex County in the south, and Louisa County in the west to King and Queen County in the east. It includes Richmond proper, its main suburbs and the Tri-Cities.

Virginia's statewide unemployment rate, meanwhile, declined to 6.5 percent in August from 6.9 percent in July, in part because of construction work at the state's military bases and in part because of the number of students leaving the work force to return to school, Mezger said. ------

Contact David Ress at (804) 649-6051 or dress@timesdispatch.com.

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