Hawai'i's unemployment rate didn't increase in June, staying at 7.4 percent for a second straight month.

But economists said not to put too much faith in the numbers, or think unemployment is letting up.

"Under normal circumstances I would say this is extremely good news, but the cloud on the horizon is that there is one big event that could turn it back and that's the state's budget cuts," said Lawrence "Bill" Boyd, an economist at the Center for Labor Education and Research at the University of Hawai'i-West O'ahu.

Boyd said the budget cuts will offset any type of economic growth.

"A layoff of 5,000 workers raises the unemployment by 8 percent and that's how much Gov. Lingle's 14 percent pay cut equals to," Boyd said.

Byron Gangnes, director of research for the University of Hawai'i Economic Research Group, said the unemployment number does not tell the whole story, which includes a decline in the number of jobs.

"There has actually been a drop in employment," Gangnes said.

June's unemployment compared with 3.9 percent a year earlier and the 9.5 percent national unemployment rate.

The U.S. Bureau of Labor Statistics data show the number of people employed in Hawai'i fell to 599,900 from 619,500 a year earlier. There were 47,700 people unemployed during the month, the bureau reported.

Meanwhile, the number of people in the workforce fell from approximately 654,600 in June 2008 to 645,500 in June 2009.

Gangnes warned that even rougher times may lay ahead.

"While it's nice to say the unemployment rate is going to improve, we're still seeing a rapid amount of job loss each month," Gangnes said.

"If you look at Kaua'i and the Big Island, their unemployment is over 10 percent. And statewide it's the highest it's been since the mid-1970s. Even without these statistics, there is just a plain old unemployment problem and it will probably be that way for a while before we see an improvement on that."

Gangnes predicted high unemployment persisting for the next couple of years due to delayed improvement in the construction and tourism sectors.