MINNEAPOLIMEDIA NEWS | MINNESOTA ECONOMY: Unemployment Rises to 4.5% in February as Labor Force Contracts

ST. PAUL, MN (April 17, 2026)

Minnesota’s unemployment rate rose to 4.5 percent in February, according to new data released by the Minnesota Department of Employment and Economic Development, reflecting a modest increase alongside a contraction in the state’s labor force.

The seasonally adjusted jobless rate increased by one-tenth of a percentage point from January. At the same time, the state’s labor force declined by approximately 8,575 workers to about 3.17 million, and the labor force participation rate fell to 67.9 percent.

Total employment dropped by an estimated 11,678 jobs over the month, while the number of unemployed individuals increased by roughly 3,100, indicating a broad softening across multiple indicators.

Sector-Level Changes

Employment trends in February showed uneven performance across industries, with gains concentrated in a limited number of sectors and losses spread across several others.

Education and health services led job growth, adding approximately 4,100 positions. Smaller gains were recorded in information (+200) and mining and logging (+100).

Losses were more widespread. Trade, transportation, and utilities shed about 3,300 jobs, followed by leisure and hospitality (-2,000), construction (-1,700), and manufacturing (-1,300).

Contributing Factors

State officials attributed the shift in labor market conditions to a combination of federal policy changes, global economic pressures, and data reporting disruptions.

DEED Commissioner Matt Varilek said federal immigration enforcement activity appears to have influenced workforce participation, particularly in sectors that rely on immigrant labor.

Economic analysts have noted that increased enforcement activity can lead to measurable declines in labor force participation, especially in industries such as hospitality, construction, and agriculture.

Officials also pointed to broader economic pressures, including federal trade policies and tariffs, which have affected manufacturing and trade-dependent sectors in Minnesota.

Data Delays and Reporting Issues

The February report was released later than typical monthly schedules due to delays in federal data processing following a late-2025 federal government shutdown. The Bureau of Labor Statistics experienced reporting backlogs, which affected the timing and completeness of state-level employment data.

DEED officials said additional data adjustments are expected in the March employment report, which is anticipated to incorporate delayed federal inputs and provide a more complete assessment of labor market conditions.

Broader Context

Minnesota’s unemployment rate remains close to the national average, which stood at approximately 4.4 percent during the same period. However, recent months have marked a shift from the state’s historically tighter labor market conditions.

DEED Labor Market Information Director Angelina Nguyen indicated that while job growth has slowed and unemployment has increased, Minnesota’s diversified economy—particularly strength in health services—continues to provide some stability.

The February report reflects a period of transition for Minnesota’s labor market, with policymakers and economists monitoring the combined effects of federal policy changes, labor force participation trends, and ongoing economic pressures.

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