Tennessee's seasonally adjusted unemployment rate held at 3.4% in August, matching the state's lowest reading of 2026, while employers added 1,800 nonfarm payroll jobs from July. The Tennessee Department of Labor and Workforce Development released the figures September 17.
The rate was unchanged from July and one-tenth of a percentage point below August 2025. It also remained below the 4.1% national rate. The largest month-to-month payroll gains were in leisure and hospitality, government and construction, according to the department; over 12 months, employers added 16,400 jobs, led by health care and social assistance, administrative and support services, and leisure and hospitality.
A steady rate masks a smaller labor force
The unemployment rate alone does not describe the full labor market. Tennessee's detailed August economic analysis estimates a seasonally adjusted civilian labor force of 3,486,012 people—essentially flat from July but 50,176 smaller than a year earlier. Employment in the household survey was estimated at 3,366,389, down 46,173 over the year, while the number counted as unemployed fell by 4,003.
Those figures can coexist with annual payroll growth because they come from different statistical series. The household survey estimates people who are employed or actively looking for work; the payroll survey counts jobs at establishments, so someone with more than one job can appear more than once. The Bureau of Labor Statistics' Tennessee data page labels labor-force figures as people and nonfarm employment as jobs, and notes that the most recent estimates are preliminary.
For workers, the practical message is mixed but stable: job counts rose modestly in August and unemployment remained low, yet the year-over-year contraction in the labor force warrants attention when assessing hiring conditions or the state's available workforce. Sector totals also moved unevenly; the state analysis shows service-providing employment expanding while goods-producing employment declined over the year.
Seasonal adjustment also matters. Before adjustment, Tennessee's unemployment rate rose from 3.6% in July to 3.7% in August; the department's tables show the adjusted rate stayed at 3.4%. Adjustment is intended to remove recurring calendar patterns, so the adjusted series is the better month-to-month signal.
Manufacturing pay and the next release
Manufacturing production workers saw average hourly earnings rise 29 cents from July to $25.22 in August, while average weekly hours fell from 43.2 to 42.8. Average weekly earnings consequently increased only $2.44, to $1,079.42, according to the same state analysis. Those are averages, not guaranteed changes for individual workers.
Statewide figures do not show how conditions vary from Memphis to the Tri-Cities or among rural counties. Tennessee plans to release August county unemployment estimates at 1:30 p.m. Central on Thursday, September 24. Employers, job seekers and local officials can then compare county rates through the state's unemployment dashboard, while remembering that small-area monthly estimates can be volatile and may be revised.
