South Carolina’s unemployment rate has sunk to its lowest level in four years – plunging a full percentage point in the past two months – even as the national rate climbed slightly.

The state’s jobless rate landed at 8.6 percent in October, down from 9.1 percent in September and 9.6 percent in August, the S.C. Department of Workforce and Employment said Tuesday. A year ago, the rate was 10 percent.

The drop was the biggest in the nation in October, and put the state’s unemployment rate at levels not seen since the recent recession started to take hold in South Carolina in November 2008.

The jump was fueled by schools continuing to fill up their positions across the board and retailers gearing up for the holiday shopping season, which traditionally begins Friday. An improving housing market also added jobs as home builders took out more permits and hired hard-hit construction workers.

“It’s positive,” University of South Carolina economist Joey Von Nessen said. “We’re seeing real employment gains and real improvement. However, we have to take it with a grain of salt because we have a labor force that is substantially smaller than a year ago.”

October’s report shows the labor force – those with jobs or who are actively looking for work – grew by a modest 3,891 people and lags by more than 21,500 the October 2011 pool of 2.16 million.

Von Nessen said the state’s workforce will grow if more people start feeling encouraged about the job market and begin searching for work in earnest; that could push the unemployment rate back up in the coming months until those folks land jobs. But looming concerns like the so-called fiscal cliff – automatic $1.2 trillion in across-the-board budget cuts stemming from last year’s budget ceiling fight and set to take effect in January paired with expiring tax credits that would hit the middle class hard in the wallets – could dampen that equation.

“It’s hard to predict what the labor force is going to do in the long run,” he said.

And despite the return to November 2008 unemployment numbers and steady improvement over the past year, South Carolina still has a long way to go to reach pre-recession unemployment levels of less than 7 percent. The last time South Carolina hit 8.6 percent unemployment in November 2008, it was the highest level since 1984 – 25 years. The state’s lowest jobless rate during that period was 3.2 percent in March of 1998. In November 2009, the unemployment rate peaked at 12 percent.

Driving this month’s drop was:

•  Government, primarily in local and state education services. It was the fastest growing sector, adding 5,100 jobs in October.

Adrienne Fairwell of the workforce department said that school districts continued to fill their positions in September and October with everything from teachers’ assistants to cafeteria workers, some of whom are in temporary positions.

“It’s across the board,” she said.

•  Trade, transportation and utilities – which includes retail. The sector added 1,900 jobs as stores beefed up staff for the holiday sales season.

“It’s typical to see more hiring this time of the year,” Von Nessen said.

•  Construction. The sector grew by 900 jobs as the housing market continues to pick up steam. Housing permits were up 40 percent in October in the Columbia area and 20 percent in the past 10 months, compared with the same period a year ago.

Still, those numbers could be better, as construction firms wait and see the impact of variables such as the “fiscal cliff” and the federal health care reforms.

“I’m nervous about hiring people … not knowing what the tax burden is going to be,” said Tony Thompson of the Columbia firm Remodeling Services Unlimited.

Nationally, the unemployment rate ticked up to 7.9 percent from 7.8 percent in September as more people started looking for work.

Jobless rates in 37 states fell last month, according to federal bureau of Labor Statistics. And although it had the biggest month-to-month drop, South Carolina’s rate tied for the 12th-highest unemployment in the country.

Sectors losing steam included the hospitality industry, which posted a loss of 400 jobs because of seasonal drops in tourism-related hotel and food services needs. That hit the state’s coastal areas hardest, including Myrtle Beach, which saw unemployment rise to 9.1 percent from 8.8 percent in September. The information sector also was down by about 200 jobs.

Unemployment dropped in 17 of South Carolina’s 46 counties and was lowest in Lexington County, at 6.3 percent. The jobless rate went up in 11 counties and peaked in Allendale County at 16.6 percent. Eighteen counties marked no change.