Colorado’s unemployment rate fell sharply to 7.4% in July, but for all the wrong reasons — nearly 100,000 residents left the job market.

The July rate was down from 10.6% in June, a month that saw more than 100,000 returning to the job market. That trend was reversed in July, according to data released Friday by the U.S. Bureau of Labor Statistics.

Nearly all of the drop in July’s unemployment rate resulted from the reduction in the labor force, which totaled just 10,000 more people than had been in the job market in May, just after the state lifted its stay-at-home order aimed at slowing the spread of the coronavirus. Colorado’s unemployment rate remains nearly triple the record 2.5% low it reached in February before the pandemic struck.

Colorado first-time unemployment claims rise for first time in five weeks

Ryan Gedney, senior economist for the Colorado Department of Labor and Employment, said the agency’s internal data shows most of the decline in the labor force came from people who left the job market because they “didn’t want a job now.”

He said there is no evidence that those who didn’t want to work did so because they were collecting an extra $600 a week in unemployment benefits, which expired late last month.

The decline in the labor force came even though the number of people employed in Colorado increased by 11,100. The unemployment rate is calculated from a survey of households; a separate survey of employers showed that the state gained 6,200 jobs last month.

The payroll jobs gains in July mostly came in the restaurant, tourism, retail and transportation industries, but the government sector shed 17,200 jobs, offsetting nearly three-quarters of the private-sector gains. The government job losses were split between state (about two-thirds) and local (about one third) governments — all in elementary and secondary schools and colleges and universities.

Gedney said the state has recovered about half of the private-sector jobs lost since February and about 50% of the remaining unemployed people were on temporary layoff.

Colorado’s unemployment rate rises as people flood job market

Unemployment rates fell in all seven Colorado metro areas, with Fort Collins the lowest at 6.2% and Pueblo the highest at 7.9%. Among counties, Gilpin County, which includes the casino towns of Black Hawk and Central City, had the state’s highest jobless rate at 12%, while the adjacent Clear Creek County had the lowest rate at 2%.