Minnesota lost 4,600 nonfarm payroll jobs in September and its unemployment rate rose to 4.5 percent, according to the Department of Employment and Economic Development's October 15 release. The seasonally adjusted monthly decline contrasts with stronger year-over-year hiring, leaving the state with an uneven employment picture rather than an unqualified recovery.
Total Minnesota jobs were up 1.2 percent from September 2025, compared with national growth of 0.3 percent, DEED reported. But the state's unemployment rate increased one-tenth of a percentage point from August and remained above the national rate of 4.2 percent. Private-sector employment fell by 5,000 jobs during the month even as its annual growth reached 1.3 percent.
Industry gains did not offset losses
DEED's detailed analysis shows that manufacturing added 1,600 jobs during September, construction added 1,100, and leisure and hospitality added 1,000. Smaller gains in government and financial activities also helped. These were monthly, seasonally adjusted changes, not measures of total hiring or available vacancies.
Those increases were outweighed by losses elsewhere, the analysis shows. Educational and health services shed 5,700 jobs, while professional and business services lost 2,100. Trade, transportation and utilities lost another 800 jobs. Manufacturing, however, remained a source of annual growth, adding 12,437 positions over the year. The contrasting time frames matter: an industry can expand compared with last September while contracting compared with August.
The same analysis shows a modest increase of 843 people in Minnesota's labor force, bringing it to about 3.13 million. Nevertheless, the participation rate fell to 66.7 percent. The number of employed residents decreased while the number classified as unemployed increased; the larger labor force was not, by itself, evidence that more residents had found work.
Pay and measurement complicate the outlook
MPR News reported that average hourly earnings were unchanged over the year while consumer prices rose 3.7 percent, reducing the purchasing power represented by that average. DEED Labor Market Information Director Angelina Nguyen told MPR that the distribution of job growth across lower-paying industries could help explain weak average earnings. That is an explanation offered by an official, not a demonstrated cause or a finding that every worker's pay stayed flat.
The Bureau of Labor Statistics distinguishes payroll employment, which counts jobs at employers, from household-survey measures that count people and their labor-force status. Multiple-job holders can appear more than once in payroll totals but only once as employed people. The figures should not be treated as interchangeable.
BLS also cautions that short-term survey movements carry sampling uncertainty and that payroll estimates undergo benchmark revisions. DEED's October release said officials would watch Minnesota's unemployment rate, including during annual revisions in early 2027. September's results establish a mixed starting point for that review, not a settled explanation for the state's labor-market changes.
