SAN DIEGO (AP) - California's unemployment rate reached 6.9 percent in June, matching its highest level in nearly five years as job losses spread across the economy, state officials said Friday.

The June figure represents a small increase from 6.8 percent in May but a significant jump from 5.3 percent in June 2007, the Employment Development Department said.

The numbers indicate that weak consumer spending is emerging as the major drag on employment, wrote Stephen Levy, senior economist for the Center for Continuing Study of the California Economy.

Rising energy prices and sharp losses in home and stock values - along with the deteriorating jobs picture - indicates California has entered a mild recession, he said.

As an example of retail weakness, he noted that 88 of the roughly 600 stores that Starbucks Corp. plans to close are in California.

The state's jobless rate has increased 1.2 percentage points since February to approach its highest level since November 1996, when it hit 7 percent. It last stood at 6.9 percent in October 2003.

The number of Californians looking for work approached 1.28 million last month, up 19,000 from May and up 310,000 from June 2007.

Some 473,400 people had been laid off, while 103,900 left their jobs voluntarily. The rest were either temporarily employed or new job seekers.

More than 15.1 million people in California held payroll jobs last month. Total employment topped 18.4 million.

The construction sector posted the biggest annual job loss, shedding 86,000 jobs for a 9.5 percent decrease during the past year. However, construction jobs fell only slightly from May.

The financial sector shed 32,000 jobs over the past year for a 3.5 percent decline, but eked out a small increase from May.

The government sector recorded the largest monthly job loss, down 6,500 jobs from May. Manufacturing jobs continued to vanish. In all, the state lost 21,200 jobs in June.

California is tied with Mississippi for the third-highest jobless rate in the nation behind Michigan at No. 1 and Rhode Island, according to the U.S. Bureau of Labor Statistics The national unemployment rate was 5.5 percent last month.