Minnesota's Job Market Shows Signs of Weakness in January

In January 2026, Minnesota's job market exhibited stagnation, with the state gaining only 100 jobs and experiencing an increase in the unemployment rate to 4.4%, slightly above the national average of 4.3%. The Minnesota Department of Employment and Economic Development (DEED) reported that job growth remained flat at 0.0%, contrasting with a national job growth rate of 0.1%. The report highlighted job losses in six out of eleven subsectors, notably a decline of 4,000 jobs in the leisure and hospitality sector. Conversely, the education and health services sectors saw a modest increase of 5,000 jobs.

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DEED Commissioner Matt Varilek attributed the current economic conditions to a series of economic shocks over the past year, including erratic tariffs and significant shifts in immigration policy. He stated, "This jobs report reflects the cumulative effect of almost 12 months of turbulence." Varilek emphasized that Minnesota has been particularly affected by these factors, noting, "No state has borne the brunt of these factors more directly than Minnesota."

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Angelina Nguyen, DEED Labor Market Information director, remarked on the emerging signs of a weaker labor market, indicating that the state is witnessing smaller job growth and a higher unemployment rate than in previous years. In Becker County, the unemployment rate surged from 4.3% in October to 6.1% in December, with initial unemployment claims rising by 11% in January compared to the previous year. However, continuing unemployment claims in Becker County decreased by 9%, suggesting a complex local economic landscape.

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While the overall labor force in Minnesota decreased by 4,562 individuals, the labor force participation rate slightly declined to 68.2%. Analysts remain cautious about interpreting these trends, with some suggesting that the initial rise in unemployment claims could be attributed to an increase in workforce participation rather than a definitive loosening of the job market. The upcoming February jobs report is scheduled for release on April 16, which may provide further insights into the evolving economic situation.

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In light of the current job market conditions, Varilek expressed optimism about Minnesota's economic resilience, stating, "I remain optimistic that our economic diversity and resilience will see us through, especially if some of these headwinds fade."

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• “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,” — Matt Varilek, DEED Commissioner

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• “The data are showing signs of a weaker labor market,” — Angelina Nguyen, DEED Labor Market Information Director

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This analysis underscores the challenges facing Minnesota's job market as it navigates through a period of economic uncertainty, with varying implications for different regions within the state.

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