INDIANAPOLIS - Indiana's unemployment rate fell to 9.6 percent in September, down 0.3 percentage points from August, as growth in the manufacturing and service sectors helped Indiana gain the most new jobs of any state.

Figures released Wednesday by the Bureau of Labor Statistics show that Indiana added about 4,400 jobs to record its first back-to-back monthly gains since late 2007.

The state's seasonally adjusted jobless rate, which fell from 9.9 percent in August, reflected a regional trend. The Midwest was the nation's only region where the unemployment rate declined.

In September, Indiana had the lowest unemployment rate among its neighboring states. Michigan's jobless rate was 15.3 percent, Kentucky's stood at 10.9 percent, Illinois' jobless rate was 10.5 percent and Ohio's was 10.1 percent.

But with 287,720 Indiana residents still out of work in September, it would be premature to declare that the state has seen the worst of the recession, said Matt Kinghorn, an economic research analyst with the Indiana Business Research Center at Indiana University.

Indiana must first see a few more months' worth of job gains, he said.

"We need to see the trend play out a little longer before we can say that we've now turned the corner," Kinghorn said. "These numbers are encouraging but they don't necessarily say that we're out of the woods yet."

The center has predicted that the state's unemployment rate could hit 11 percent before beginning a more permanent downward trend.

The 9.6 percent jobless rate puts Indiana below the national rate for the first time since October 2008. Last month, the nation's unemployment rate stood at a 26-year high of 9.8 percent.

Indiana Department of Workforce Development Commissioner Teresa Voors said she is encouraged by September's gains in manufacturing and professional and business service jobs.

Manufacturers hired about 3,000 workers last month, while the professional and business service sectors added about 2,900 jobs.

But the state also lost about 3,300 construction jobs, which Voors said could indicate that its construction season is coming to an early end.

"It's still too early to say we have turned the corner, but Indiana's economy is definitely trending in the right direction," Voors said in a statement.

Robert Guell, an economics professor at Indiana State University, said the state has benefited from a rebound in the auto sector and a healthy medical device industry. Indiana is home to many auto parts and assembly plants, which he said are ramping up production as General Motors Corp. and Chrysler LLC seek to replenish inventories depleted by the popular Cash for Clunkers program.

Honda Motor Co., which manufactures the Civic at a plant in Greensburg, was a major beneficiary of the clunkers program, which provided rebates to consumers who traded in old cars for newer, more fuel-efficient models, Guell said.

Indiana's jobless rate had been at 10 percent or higher since April before it dropped to 9.9 percent in August. It fell from 10.7 percent in June to 10.6 percent in July, but that decline was considered statistically insignificant.

Northern Indiana's Elkhart County remained the county with the state's highest unemployment rate in September. The county, which has been hit hard by the collapse of recreational vehicle manufacturing, had a jobless rate of 15 percent last month, a drop of 1 percentage point from August.

That continued a steady decline in the county's unemployment rate since its March peak of 18.8 percent. County-level data is not seasonally adjusted as the statewide rate is.

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AP Economics Writer Christopher S. Rugaber in Washington contributed to this report.

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