South Dakota retained the nation’s lowest unemployment rate in August at 2.0%, but the headline came with a quieter warning: the state’s labor force, employment and payroll counts all declined from July.
The U.S. Bureau of Labor Statistics’ September 18 release placed South Dakota ahead of North Dakota, where unemployment was 2.2%, and far below the 4.1% national rate. South Dakota’s rate was unchanged from June and July, according to the agency’s state economic dashboard.
Low unemployment ordinarily signals a tight labor market. In this case, however, the underlying counts show why the percentage should not be read as proof of accelerating hiring. South Dakota’s seasonally adjusted civilian labor force fell to about 485,900 people in August, down 1,200 from July and 5,900 from March. Employment declined to roughly 476,300, down 1,100 in one month, while the number classified as unemployed edged down to 9,600.
That means the unemployment rate stayed low partly because fewer people were participating in the labor market. The distinction matters for employers trying to fill positions and for state officials assessing whether growth is being constrained by worker availability. BLS separately cautions that labor-force figures come largely from a household survey, while payroll estimates come from an establishment survey; the two measures describe different populations and should not be treated as interchangeable.
Payroll employment also softened. South Dakota employers reported about 470,200 nonfarm jobs in August, 1,100 fewer than in July, although the total remained 0.2% above August 2025. The national release said South Dakota’s monthly payroll change was not statistically significant; only four states registered significant gains in August.
The industry mix was uneven. The state dashboard shows leisure and hospitality employment 7.5% above a year earlier, education and health services up 2.2%, and construction up 2.7%. By contrast, trade, transportation and utilities payrolls were down 2.9% from August 2025, professional and business services fell 3.2%, and government employment declined 1.6%.
Those shifts are more useful for planning than the statewide rate alone. A growing hospitality employer may still face an unusually shallow applicant pool, while workers leaving shrinking sectors may need different skills or may live far from available jobs. Statewide averages do not resolve those geographic and occupational mismatches.
For workers, the practical takeaway is that a very low statewide unemployment rate can coexist with weaker conditions in particular industries. South Dakota’s Department of Labor and Regulation provides labor-market tables, career resources and access to 16 Job Service offices, while its SDWORKS system lists openings and training options.
The August figures are preliminary and may be revised. BLS has scheduled its September state employment report for October 20. Until then, South Dakota remains first in the national unemployment ranking, but the falling labor-force and payroll counts offer the more consequential measure of whether that position reflects durable expansion.
