Sept. 20 (Bloomberg) -- Unemployment rose last month in the twelve most hotly contested battleground states in the presidential election, including Michigan, Florida and Ohio.

Michigan's jobless rate rose to 8.9 percent, the highest in the nation, with the loss of more than 20,000 manufacturing jobs in August, the Labor Department reported yesterday. Unemployment in Florida has surged 2.3 percentage points to 6.5 percent over the last 12 months.

News about swelling unemployment rolls capped a tumultuous week when the worst financial crisis since the Great Depression dominated the presidential campaign. With Republican President George W. Bush in the White House, Democratic nominee Barack Obama gained support as economic concerns monopolized political debate.

``Voters will be frustrated with the status quo, and Democrats have a better chance at making the argument that they are willing to use government to alleviate the pain,'' said Julian E. Zelizer, a professor of history and public affairs at Princeton University. ``Republicans have more trouble singing the populist song, and it is their guy who is in charge as the economy stumbles.''

In the latest Gallup Inc. tracking poll, Obama led Republican nominee John McCain 49 percent to 44 percent, after trailing by 2 percentage points just a week earlier.

In the interim, Lehman Brothers Inc. filed history's biggest bankruptcy case, Merrill Lynch & Co. was sold, American International Group Inc. was rescued with an $85 billion loan and the Bush administration mounted unprecedented federal interventions to calm credit-market chaos.

Five-Year High

Nationwide, the jobless rate in August hit a five-year high of 6.1 percent. Unemployment rose last month in 44 states. Five rates registered a drop and Maine was unchanged.

Among a dozen states considered to be highly competitive in the presidential contest, 11 had ``significant'' unemployment rate changes over the last 12 months, the Labor Department said. Jobless rates in Florida, Virginia, North Carolina, Colorado and Nevada were more than 40 percent higher than their August 2007 levels. Michigan, Missouri, Nevada, New Hampshire, New Mexico, Ohio and Pennsylvania also had significant increases in the past year. Wisconsin's rate rose only 0.2 percentage points.

The twelve battleground states together account for 157 of the 270 electoral votes needed to win the White House.

Unemployment Jumps

Even states with jobless rates below the 6.1 percent national figure saw unemployment jump from last year's levels. Colorado's unemployment rate rose 1.6 percentage points since August 2007 to 5.4 percent; Virginia's increased 1.5 points to 4.6 percent. Those states' economies have been kept afloat in part by high commodity prices and federal government jobs, respectively.

New Hampshire, with 4.2 percent unemployment, and Wisconsin, at 5.1 percent, have fared considerably better than the nation overall.

In Missouri, which has voted for every presidential winner but one since 1900, joblessness surged to 6.6 percent in August from 5.2 percent a year earlier.

Obama, speaking Friday morning in Philadelphia, said the August increase in Pennsylvania's unemployment rate, to 5.8 percent from 5.4 percent in July, demonstrated that economic policies promoted by Republicans Bush and McCain had failed.

``We can't afford four more years of the Bush-McCain economic policies that led our economy into this mess,'' Obama said.

Losing Factory Jobs

Job losses in Michigan and Ohio, which have a combined 37 electoral votes, primarily stemmed from a slump in factory payrolls as the states' economies continued to slow. Michigan alone lost 20,100 manufacturing jobs from July to August. In Michigan, employment has declined by almost 70,000 jobs over the past year.

General Motors Corp. has said it wants to cut 20 percent of its salaried worker costs in the U.S. and Canada, after slumping demand led to a $15.5 billion second-quarter loss. Neither GM nor Ford Motor Co. has made a profit since 2005, and prospects for ending the losses before 2010 are waning as they close truck plants and boost investment in fuel-efficient small cars.

Florida has lost almost 100,000 jobs since August 2007, with about three quarters of them in the construction industry. The state has been particularly hard hit by the national housing recession.

Housing Woes

Home prices in the area around Cape Coral and Ft. Myers fell 33 percent in the second quarter, according to the National Association of Realtors, the second-worst drop among metropolitan areas nationwide. Florida, Nevada and California had the highest rates of default or foreclosure in July. Florida has 27 electoral votes, the most in any battleground state.

Nevada, too, has been hard hit by the housing slump. The state's jobless rate jumped a half percentage point from July to August, and now stands at 7.1 percent. It was 4.9 percent a year ago. New Mexico's jobless rate also rose 0.5 points, though it stands at a much lower 4.6 percent.

North Carolina, which for years has been losing textile factory jobs but has gotten a boost more recently from a growing automotive industry, lost 3,500 jobs last month. That pushed its unemployment rate to 6.9 percent from 6.6 percent in July.

To contact the reporter on this story: Matthew Benjamin in Washington at mbenjamin2@bloomberg.net.

Last Updated: September 20, 2008 00:01 EDT