Arizona’s unemployment rate held at 4.9% in August, but the latest reading remained half a percentage point above its August 2025 level, according to the state employment report released Friday by the U.S. Bureau of Labor Statistics. The year-over-year increase from 4.4% was statistically significant, while the month-to-month rate was unchanged. Arizona’s rate also stood above the national rate of 4.1%.

The stable headline rate masked continued movement underneath it. Arizona’s seasonally adjusted civilian labor force declined to 3,701,822 in August from 3,709,898 in July, while the number of unemployed residents increased to 182,254 from 181,302. Compared with August 2025, the labor force was smaller by 105,768 people and the number counted as unemployed was higher by 15,935, the BLS state labor-force table shows.

Those figures matter because an unemployment rate can hold steady even when the pool of people working or actively looking for work changes. The federal definition counts a person as unemployed only when that person is not working, has actively sought work during the prior four weeks and is available to work. The BLS technical note says the labor-force estimates are residence-based and produced through the federal-state Local Area Unemployment Statistics program.

Payroll growth remains modest

A separate employer survey estimated 3,279,500 nonfarm payroll jobs in Arizona in August. That was 4,100 fewer than in July but 21,000 more than in August 2025. BLS classified Arizona’s payroll level as essentially unchanged both over the month and over the year; only four states registered statistically significant monthly job gains in August.

The industry payroll table shows a mixed month. Construction added an estimated 100 jobs and manufacturing added 300. Professional and business services declined by 1,400 jobs, education and health services by 1,000, government by 1,900 and leisure and hospitality by 600. The figures are preliminary and seasonally adjusted, so they are intended to remove predictable calendar effects rather than describe the raw number of jobs present during Arizona’s summer.

The distinction between the two surveys is important for interpreting the report. The household-based labor-force estimates count Arizona residents, including people whose jobs may be across state lines or who are self-employed. The establishment survey counts payroll jobs located at Arizona employers, meaning one person with two jobs can appear twice and self-employed workers generally are excluded. The measures therefore answer different questions and do not have to move together.

For state policymakers and employers, the August release points to a labor market that is not contracting sharply but is softer than a year ago by the unemployment measure. BLS cautions that state estimates are based on surveys, administrative records and modeling, and that preliminary figures can be revised. The agency’s next state employment report, covering September, is scheduled for October 20.