Employers in San Diego County cut jobs last month at their fastest rate in 17 years as holiday hiring failed to overcome the effects of locked-up credit markets.

The region lost 2,200 jobs from payrolls last month, bringing the year's losses to 18,500, or 1.4 percent of the total, the California Employment Development Department reported Friday. It was the largest 12-month contraction since 1991-92, when cutbacks in defense spending helped tip Southern California into recession.

Economists trace the latest woes to a swift decline in home prices in 2007, which rippled through the 58 percent of San Diego County households that own their homes, economists have said. Burdened by record debt levels and suddenly without home equity, consumers pulled back spending on a massive scale.

The effects have shown up most dramatically in the region's retail sector. Department stores and several other classes of retailers added about 300 jobs last month, but that bump was tiny compared to hiring sprees in other recent holiday seasons. The sector has shed nearly 10,000 jobs since December 2006, according to the EDD's data, which are compiled from employers' periodic reports.

Nearly every sector of the county's economy, which totals about 1.3 million jobs, shrank last month. Government agencies and health care companies hired, but weakly. Hotels and casinos, a rare bright spot last year, have shed workers for four straight months.

"I don't see any ray of hope that those numbers are going to turn around any time soon," said Esmael Adibi, director for the A. Gary Anderson Center for Economic Research at Chapman University in Orange.

The construction industry continued to shed workers as banks hesitated to issue loans on office buildings and the state's massive budget deficit held up road work. Builders obtained permits for $197 million of nonresidential buildings in the last three months of 2008, the weakest quarter in at least four years.

The recent downturn follows a decade of sustained growth since the region's economy roared out of recession in the mid-1990s. The regional job base grew at rates of 3 percent to 5 percent for most of that time, and even managed to continue growing slightly during a mild national recession in 2001.

Not this time. Unemployment rose last month to 7.4 percent, according to a separate survey of households in the region. That was its highest level since August 1994.

"Our database has never been so full of qualified, skilled people," said Phil Blair, co-owner of the Manpower employment agency franchise in San Diego and Riverside counties. Blair said the companies hiring are mostly limited to those with unique and hotly demanded products.

The statewide unemployment rate, statistically adjusted for seasonal factors, rose to 9.3 percent from 8.4 percent in November. The increase of 0.9 percentage points was the largest one-month jump since 1976, an EDD spokesman said.

The unemployment numbers are considered less precise because they're based on a smaller survey in which respondents answer whether they're working or, if not, whether they're actively looking for work.

Last month's data showed an unusually large increase in the region's labor force -- 9,600 people -- suggested some family members may be trying to make up for others' lost income.

Carlsbad mother Chris Cassidy, who last held a full-time job in 2004, started looking again last year because her family's debts left little other choice.

Previously a midlevel manager at a Vons supermarket, Cassidy said she's now going for anything that pays more than minimum wage.

"It's a hard market," she said. "I thought I'd have a job in one or two months."

Contact staff writer Chris Bagley at (760) 740-5444 or cbagley@nctimes.com. Bagley blogs about local economic trends at http://bizblogs.nctimes.com.