Illinois’ unemployment rate fell to 4.7% in August from 4.9% in July, but the improvement came alongside a smaller labor force and a modest decline in payroll jobs. The Bureau of Labor Statistics’ September 18 release placed the national rate at 4.1% and said Illinois’ year-over-year increase—from 4.3% in August 2025—was statistically significant.
The state’s seasonally adjusted labor force shrank by about 22,600 people in August, to 6.477 million, while the number classified as unemployed declined by about 8,900, to 306,781. Calculations from the official state labor-force table show employment among Illinois residents also decreased by roughly 13,700 over the month. That combination matters: a lower unemployment rate can reflect people finding work, leaving the labor force or both.
Compared with August 2025, Illinois had about 82,200 fewer people in its labor force and approximately 23,000 more unemployed residents. The state’s 4.7% rate was 0.6 percentage point above the national rate, although BLS cautions that state estimates are preliminary and subject to revision.
Payrolls slipped after a stronger July
A separate employer survey counted 6.176 million nonfarm payroll jobs in Illinois in August, down 4,400 from July but up 15,000 from a year earlier. The industry payroll table shows construction added about 1,500 jobs during August and manufacturing was nearly unchanged, adding about 100. Those movements did not make Illinois one of the four states with a statistically significant monthly payroll increase.
Other sectors moved in different directions. Education and health services declined by about 6,100 jobs from July, while leisure and hospitality added approximately 1,800 and government added about 800. Trade, transportation and utilities fell by roughly 1,000 jobs, financial activities lost about 1,700, and professional and business services gained about 1,000.
Those industry figures describe jobs located in Illinois, while the unemployment rate comes from a household-based estimate of Illinois residents. The distinction explains why payroll employment and resident employment can move differently in the same month. BLS says the household figures are modeled largely from surveys, while payroll estimates come from establishments.
The labor-force decline also extends beyond one month. Illinois’ seasonally adjusted labor force fell from about 6.524 million in June to 6.500 million in July and 6.477 million in August. Over the same period, the estimated number of unemployed residents decreased from 329,707 to 306,781.
Nationally, the Joint Economic Committee’s state update reported that payroll jobs rose in 35 states and fell in 16 on a simple numerical basis. BLS applies statistical tests before labeling a state change significant; under that standard, August payroll employment increased in four states and was essentially unchanged in Illinois and 45 others.
For Illinois employers and job seekers, the August report points to a labor market that remains mixed rather than sharply improving: fewer people were counted as unemployed, but fewer residents were participating, and payroll growth paused after July’s gain. The September state report is scheduled for October 20.
