Hawai'i's seasonably adjusted unemployment rate in December climbed to its highest point in more than three years at 3.2 percent, providing further evidence that the state's economy is slowing.

At 3.2 percent, the unemployment rate was higher than November's 2.9 percent and the 2.0 percent rate registered in December 2006. The last time the state's jobless rate stood at 3.2 percent was in May 2004.

Despite the increase, Hawai'i continued to have one of the lowest unemployment rates in the country, according to the state Department of Labor and Industrial Relations. Idaho and South Dakota were tied for top honors at 3 percent, followed by Wyoming at 3.1 percent.

The national jobless rate also continued to climb in December to 5.0 percent, an increase from November's 4.7 percent.

The increases did not come as a surprise to economists, who have been predicting a slowdown for some time.

"We're seeing it on several fronts," said Leroy Laney, professor of economics and finance at Hawai'i Pacific University. "Tourism is not performing that well. The office vacancy rate was up in the last half of the year, which is a number that was at a record low and now it's rising. The construction cycle is winding down."

Laney said Hawai'i is not yet in a recession, although there are signs that the nation is.

"No one here is forecasting a recession. but the national economy could very well be in a recession now," he said.

Signs of a softening job market were evident in this week's Job Quest job fair at Blaisdell Center.

The fair attracted 3,600 job seekers, compared with 3,500 at last September's fair. But the 182 companies and organizations that set up booths were down from the 200 that registered last fall.

Last month, the state reported that 626,850 people were employed and 20,750 were unemployed, for a seasonably adjusted labor force of 647,600. In December 2006, 634,800 people were employed and 13,000 unemployed, for a labor force of 647,800.

Hawai'i's average jobless rate in 2007 was 2.6 percent, the same as in 2006. Researchers at the University of Hawai'i Economic Research Organization are forecasting the average unemployment rate to rise to 2.8 percent in 2008.

The latest economic expansion has created 72,000 jobs over the past five years, said Labor Department director Darwin Ching.

"Hawai'i's job market remains strong compared to the rest of the nation, as reflected in the average 2.6 percent unemployment rate for 2007," Ching said.

Laney said an unemployment rate of 3.2 percent still is very low and should not be cause for undue concern. He said the higher rate might benefit employers, who have complained for years about their problems finding and retaining quality workers in a tight job market.

"With a higher unemployment rate, that actually might have some silver lining because it means that more people will be available for jobs," Laney said.

The state Labor Department said seasonally adjusted non-agricultural jobs increased by 3,100 in November to 632,200 in December. Job gains were seen in educational and health services, leisure and hospitality, and trade, transportation and utilities, the state said.

Reach Curtis Lum at culum@honoluluadvertiser.com.