"This reversal is so surprisingly negative that it causes us to be cautious," said Craig Thomas, senior economist at PNC. "This report has been unreliable, and it tends to miss turning points."
The economy and labor market are indeed "at that turning point," Thomas said, noting improvements including a pickup in retail sales. He thinks the state report will reflect the recovery more accurately come March.
The report said all 50 states had an unemployment rate in December that was higher than a year earlier. Michigan again had the highest rate of unemployment at 14.6%.
But, in a sign of some improvement, 11 states added jobs in December. North Dakota again posted the lowest jobless rate, at 4.4%.
In a separate report earlier this month, the government reported the nation shed 85,000 jobs in December and the unemployment rate held at 10%.
In December, 17 states had jobless rates above that national average.
The unemployment rate is generated by the Labor Department, which conducts a monthly population survey and includes in the rate people who have actively looked for work in the past four weeks.
Those who have given up the search are not counted in the unemployment rate, and the figure is not affected by or related to the number of people who are eligible to collect on -- or have run out of -- jobless benefits.
"It's been tough, but we are certainly here at the turnaround," said PNC's Thomas. "In a few months these numbers will be revised up significantly to reflect the trends we're seeing nationally."
Thomas said the unemployment rate will peak in the first quarter of 2010 and will decline over the course of the year.
"It's always disappointing to see these numbers, and it creates some wavering on the idea of the recovery progressing," Thomas said. "But if you look at the hard evidence we are moving toward recovery."
State-by-state and regional figures: Slightly more than half of states showed minor increases or decreases in their unemployment rates over the month. South Dakota's was the only significant decline, down 0.2 percentage point to 4.7%, while 21 states posted significant jumps.
Unemployment rates in Connecticut, Massachusetts, Tennessee and West Virginia all gained 0.7 percentage point.
After Michigan, the states with the next highest rates were Nevada at 13%, Rhode Island at 12.9% and South Carolina at 12.6% -- which was a record high for the state. California was fifth at 12.4%.
Joblesslessness was highest in the West. That region had a jobless rate of 10.7%. The Northeast had the lowest rate of unemployment at 9.2%, but that was up 0.5 percentage point from November.
The unemployment rate is falling!Unemployment rate improves in Tennessee
