INDIANAPOLIS (AP) — Indiana gained 4,100 jobs in August — the nation's fifth-largest monthly increase — after posting sharp losses in July, the federal Bureau of Labor Statistics said Friday.

August's gains followed a loss of 17,600 jobs in July, painting a mixed economic picture that has become a top issue in the race between Gov. Mitch Daniels and Democratic challenger Jill Long Thompson.

Despite the increase, however, the state's seasonally adjusted unemployment rate actually rose slightly.

Long Thompson's campaign seized on the unemployment increase to bolster its claim that the state's economy is "seriously troubled," while Daniels' campaign touted the job creation number as a sign the governor's efforts to improve the economy are paying off.

Indiana trailed only three states in job-creation — Louisiana gained 9,400 jobs, Texas saw 6,800 new jobs and Nebraska reported 4,900 new jobs. The District of Columbia also was slightly ahead of Indiana, gaining 4,300 new jobs.

At the same time, the state's unemployment rate rose to 6.4 percent in August, up from 6.3 percent in July — and nearly two percentage points higher than August 2007's 4.5 percent rate.

Carol Rogers, deputy director of the Indiana Business Research Center, said the increase from July to August isn't statistically significant in a state jobs picture that is complex and sometimes confusing.

Rogers said Indiana's unemployment rate is being driven not just by plant closures or layoffs, but also by more people entering the jobs market — from new high school or college graduates to retirees seeking work to cope with higher gas and food prices.

"There are a lot of different reasons why people are unemployed — job losses are just one of them," she said. "You lost a job, or you're a new job seeker who just left high school or college, or you just got divorced or were living at home until you were 30 and your parents finally got fed up."

Layoffs or closures in adjacent states — particularly hard-hit Michigan and Ohio — have also boosted Indiana's jobless rate by impacting Hoosiers who work in those states, Rogers said.

The 4,100 new jobs created in August don't necessarily signal an economic upswing, she cautioned. Many of those jobs came as the state's manufacturers called back workers following summer plant shutdowns used to retool equipment for new production models, she said.

Gary Abell, a spokesman for the Indiana Department of Workforce Development, agreed that the end of the seasonal shutdowns played a significant role in August's job gains.

He said Indiana's factory shutdowns lasted longer this summer than in past years — up to three or four weeks instead of the typical two-week shutdown — because of lessened demand linked to the nation's weak economy.

"There were extended layoffs in July, and what we saw with the August numbers was that a lot of those people were called back to their jobs," Abell said.

He noted that Indiana's unemployment rate was lower than all of its neighboring states.

But Long Thompson's campaign called Friday's numbers a clear sign that the state's economy is faring poorly.

"While Governor Daniels continues to insist that everything in Indiana is fine, these numbers again prove that is not the case. Month after month, all the leading economic indicators point to the same conclusion: Indiana's economy is in serious trouble," she said in a statement.

Daniels campaign spokesman Cam Savage called August's 4,100 new jobs a positive sign resulting from the Republican governor's efforts to create the "best possible climate" for job growth.

"Clearly this is progress, but the governor's always said that there's more work to be done," Savage said. "The governor has focused very strongly on trying to build Indiana into a place where jobs can be created."