Minnesota unemployment rate increases, job growth remains flat: Data

Minnesota's economy is falling behind: Report

A November 2025 report states that Minnesota's economy is falling behind. FOX 9's Mike Manzoni has more.

(FOX 9) - Minnesota’s job market held steady in January, but unemployment inched up as the state continues to face economic turbulence.

Minnesota job data

What we know:

The Minnesota Department of Employment and Economic Development (DEED) reported on Thursday that the state’s unemployment rate rose two-tenths of a percentage point to 4.4% in January, while the national rate dropped slightly to 4.3%.

Meanwhile, the state’s overall job growth was flat for the month.

By the numbers:

According to the data, Minnesota gained 13,147 payroll jobs over the past year, a 0.4% increase.

The private sector added 10,060 jobs, up 0.4% year-over-year, but lost 900 jobs between December and January on a seasonally adjusted basis, while the government sector added 1,000 jobs.

Educational and health services led job gains with 5,000 new positions, up 0.8%, and construction added 3,700 jobs, up 2.6%.

However, six supersectors lost jobs, with leisure and hospitality down 4,000 jobs (a 1.5% decrease), trade, transportation and utilities down 2,500 jobs (down 0.5%), and financial activities down 1,800 jobs (down 1.0%).

The Twin Cities area lost almost 2,000 jobs in January 2026, a decrease of 0.1% compared to a year ago.

Minnesota’s labor force shrank by 4,562 people in January, and the labor force participation rate dropped one-tenth of a percentage point to 68.2%.

Big picture view:

Minnesota’s economy has faced nearly a year of turbulence, with national trends like tariffs and immigration changes impacting local businesses.

DEED officials say these factors have hit Minnesota especially hard, but point to the state’s economic diversity as a reason for optimism if conditions improve.

The overall labor force is also shrinking, reflecting broader uncertainty, officials with DEED have noted.

What they're saying:

"Our state economy has weathered a number of economic shocks over the last year, and the impact of that now appears to be showing up in the data," DEED Commissioner Matt Varilek said in a statement accompanying the data release. "This jobs report reflects the cumulative effect of almost 12 months of turbulence. The national economy has been slowing over the last year, with erratic tariffs and a radical shift in immigration policy taking a toll. No state has borne the brunt of these factors more directly than Minnesota, especially earlier in 2026. That said, I remain optimistic that our economic diversity and resilience will see us through, especially if some of these headwinds fade," said Varilek.

"The data are showing signs of a weaker labor market," said Angelina Nguyen, DEED Labor Market Information director. "We see smaller job growth and a higher unemployment rate than we have in years," said Nguyen.

What's next:

The Bureau of Labor Statistics (BLS) says it is still working through delays stemming from the federal shutdown last fall.

A February jobs report will be released on April 16, while the March report will be shared on April 30.