Payrolls increased in 39 states in October, while the jobless rate dropped in 36, indicating the labor market is steadying across much of the U.S.

Illinois led the nation with a 30,000 gain in payrolls, followed by California with 25,700 more jobs, figures from the Labor Department showed today in Washington.

The figures indicate the 80,000 increase in employment nationally in October, the smallest in four months, was broad based, which may signal a growing willingness to hire. The world's largest economy needs to generate bigger gains in payrolls to boost incomes and bolster consumer spending.

“We need to see faster improvement on the employment front,” Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “The unemployment rate will come down gradually.”

The unemployment rates in Alabama, Michigan and Minnesota each dropped by half a percentage point in October, marking the biggest declines.

Nevada's jobless rate of 13.4 percent remained the highest in the U.S., followed by California at 11.7 percent. North Dakota had the lowest unemployment, holding at 3.5 percent.

The economy expanded less than previously estimated in the third quarter, reflecting a drop in inventories that points to a pickup in growth as 2011 comes to a close, figures from the Commerce Department also showed today in Washington.

Gross domestic product climbed at a 2 percent annual rate from July through September, less than projected and down from a 2.5 percent prior estimate, according to the revisions issued. Excluding stockpiles, so-called final sales climbed 3.6 percent, the most since last year's fourth quarter.

President Barack Obama's $447 billion package of tax cuts and spending, announced in September, was blocked by Republicans in the Senate and the administration is pushing lawmakers to hold votes on individual components of his plan.

“More Americans will be out of work longer” if Republicans in Congress continue to reject Obama's jobs proposal, Treasury Secretary Timothy F. Geithner said in remarks on Nov. 8.

The government, including state and local agencies, may also have more cutbacks in staff to cope with budget restraints.

The Internal Revenue Service this month said it offered buyouts to 5,400 employees as it prepares for a likely budget cut of more than 3 percent.

State and local employment data are derived independently from the national statistics, which are typically released on the first Friday of every month. The state figures are subject to larger sampling errors because they come from smaller surveys, making the national figures more reliable, according to the government's Bureau of Labor Statistics.