Colorado’s unemployment rate rose to 4% in August as the state’s labor force contracted and household employment fell faster than the number of available workers. The latest federal data also show a 1,400-job decline in nonfarm payrolls, with construction recording the largest monthly loss.

The civilian labor force fell by about 6,500 people in August, to 3.182 million. Employment measured through the household survey declined by roughly 9,700, while unemployment increased by about 3,200, to 128,200. The combination pushed the jobless rate from 3.9% in July to 4%.

Colorado’s unemployment rate had held at 3.9% from March through July before August’s increase, according to the Federal Reserve Bank of St. Louis time series. The national rate was 4.1% in August, the Bureau of Labor Statistics reported in its state summary.

The employer survey showed total nonfarm employment declining from 2.972 million in July to 2.970 million in August. Construction lost about 2,200 jobs, professional and business services lost 800, trade, transportation and utilities lost 700, government lost 500, education and health services lost 200, information lost 200, and mining and logging declined by 100.

Several sectors partly offset those losses. Leisure and hospitality added about 1,700 jobs, financial activities gained 900, manufacturing added 500, and other services increased by 200. The distribution left total payroll employment 0.2% higher than in August 2025 despite the monthly decline.

The annual industry figures reveal a sharper divide. Education and health services grew 3.1% from a year earlier, leisure and hospitality increased 2.6%, and construction was 1.2% higher. Information employment, however, was down 8%, the steepest decline among major sectors. Financial activities fell 2.4%, mining and logging declined 2.4%, government was down 1.1%, and other services fell 0.8%.

August’s contraction in both the labor force and household employment is important because it means the higher unemployment rate was not produced by a surge of new job seekers alone. Instead, fewer residents were working, while the number classified as unemployed still increased. The payroll losses reinforce that weaker reading, even though several service categories expanded.

The two measures come from different statistical systems. The unemployment rate is based largely on a household survey and counts residents, while payroll employment comes from establishments and counts jobs by workplace location. The agency’s methodology guide explains why the series may diverge and why preliminary estimates can be revised.

For Colorado, the immediate question is whether the August weakening extends into fall. The state still had slightly more payroll jobs than a year earlier, but growth was concentrated in health services, hospitality and construction. A prolonged retreat in information, finance and government employment would leave the expansion narrower and increase pressure on workers seeking office-based or public-sector positions.