Minnesota unemployment rate drops slightly, still higher than national average

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(The Center Square) – Minnesota's unemployment rate dropped slightly in May as the state added jobs for the second straight month.

This is according to a new report from the Minnesota Department of Employment and Economic Development which shows the state's seasonally-adjusted unemployment rate fell one-tenth of a percentage point to 4.4% in May.

This comes as the national unemployment rate held steady at 4.3%. Though slightly higher at 4.4%, Minnesota only has the 19th-highest unemployment rate among the states, according to the U.S. Bureau of Labor Statistics.

The improvement comes after Minnesota's unemployment rate recently climbed to its highest level in roughly five years.

“It’s encouraging to see some progress amidst a mixed economic picture both in the state and the nation as a whole,” DEED Deputy Commissioner Kevin McKinnon said in a statement. “Minnesota continues to invest in upskilling our state's workforce and attracting and supporting business growth to maintain a diverse, resilient economy amidst these challenging conditions.”

Minnesota added 5,400 non-farm jobs in May, a 0.2% increase from the previous month. National employment also grew, though at a slower 0.1% pace. Private-sector employers accounted for most of Minnesota's gains, adding 5,900 jobs.

Despite the employment gains, the state's labor force participation rate fell for the sixth consecutive month, dropping 0.2% to 67.2%. That remains well above the national participation rate of 61.8%.

Leisure and hospitality posted the largest monthly employment increase, adding 2,400 jobs, or 0.9%. Since May 2025, Minnesota added nearly 19,700 payroll jobs, a 0.6% increase that outpaced the national growth rate of 0.3%.

The report also noted that Minnesota's recent employment gains mark a turnaround from earlier in the year.

“It’s a relief to see the unemployment rate and monthly jobs growth improve in May,” said Angelina Nguyen, director of DEED's Labor Market Information Office. “Wage and labor force growth have yet to reverse course.”

This is a relief for state officials, especially in the wake of unemployment increases during federal immigration operations like Operation Metro Surge in early 2026.

Early estimates cite more than $240 million in lost wages and more than $600 million in business losses due to those federal efforts, though they were expected to have a “lasting impact.”