Minnesota unemployment rate falls even as state loses jobs

Minnesota's unemployment rate fell from 4.4% in June to 4.3% in July 2026, even as employers cut jobs. The decline reflected a shrinking labor force, not an increase in the number of Minnesotans working. The state lost 1,900 seasonally adjusted nonfarm payroll jobs in July, including 800 private-sector jobs, according to Minnesota's Department of Employment and Economic Development. Seasonal adjustment removes recurring patterns to make monthly comparisons more meaningful.

Table of Contents

• Why did unemployment fall when employment also fell?
• What does lower labor-force participation show?
• Which industries lost or added jobs?
• Why the two headline measures can diverge

Why did unemployment fall when employment also fell?

The unemployment rate measures the share of the labor force that is jobless and actively seeking work. People who stop working or looking for work are no longer counted in that labor force. Minnesota had 3,179 fewer employed residents and 857 fewer unemployed residents in july.

The labor force fell by 4,013 people, to 3,126,848, according to DEED's July employment analysis. Because the number of unemployed residents declined relative to the smaller labor force, the unemployment rate edged down. That mathematical change does not mean the state added workers or jobs.

What does lower labor-force participation show?

Minnesota's labor-force participation rate fell one-tenth of a percentage point to 66.9%. The rate represents the share of the working-age population that is employed or actively looking for work.

read together, July's measures show: That combination makes the unemployment-rate improvement less encouraging than it might appear alone. The figures do not establish why people left the labor force.

• The unemployment rate fell by 0.1 percentage point.
• The number of employed residents declined.
• The number of unemployed residents declined.
• The overall labor force became smaller.

Which industries lost or added jobs?

Eight of Minnesota's 11 major industry groups cut jobs in July. Financial activities and government recorded the largest declines, losing 1,100 jobs each, according to DEED's state employment highlights.

Construction lost 1,000 jobs, while education and health services lost 900. Three sectors moved in the other direction: professional and business services added 2,400 jobs, other services added 900, and mining and logging added 100. These industry totals help show where payroll changes occurred, but they do not reveal whether individual workers moved between sectors or left employment.

Why the two headline measures can diverge

The unemployment rate and payroll job count come from different measures. Unemployment tracks people living in the state's resident labor force, while payroll employment counts nonfarm wage-and-salary jobs. The U.S.

Bureau of Labor Statistics says differences in concepts, sources and reference periods can cause the measures to diverge over short periods. One person can also hold more than one payroll job, while the unemployment measure counts that person once. July's job loss should also be weighed against the annual trend. Minnesota had 44,092 more nonfarm payroll jobs than a year earlier, an increase of 1.5%, compared with 0.2% nationally.

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