ANN ARBOR — Michigan lost 25,000 employed workers in August and its seasonally adjusted unemployment rate climbed to 5.0%, up from 4.9% in July, according to the Michigan Department of Technology, Management & Budget. Manufacturing recorded the largest monthly payroll decline, but West Michigan manufacturers continue to report surprisingly strong business conditions. The two trends point to a state that increasingly looks like several different regional economies rather than one.

The national unemployment rate remained at 4.1%, leaving Michigan 0.9 percentage points above the national figure. Employment fell by 25,000 during August while the number of unemployed people was essentially unchanged, producing a 25,000-person decline in the state's labor force. The labor-force participation rate dropped from 59.1% to 58.8%, and the employment-to-population ratio fell to 55.9%.

Over the past year, Michigan's employment total has fallen 3.2%, compared with a 0.4% decline nationally.

"Payroll jobs declined due to losses in manufacturing this month," said Wayne Rourke, labor market information director for Michigan's Center for Data and Analytics.

Michigan employers reported 2,000 fewer nonfarm payroll jobs in August, bringing the statewide total to 4.496 million. Manufacturing recorded the largest monthly decline, losing 2,000 jobs. Yet Michigan still had 8,000 more payroll jobs than in August 2025, an increase of 0.2%. Government employment rose by 16,000 over the year and private education and health services gained 8,000, while professional and business services lost 6,000.

Those seemingly contradictory numbers come from two different surveys. Labor-force and unemployment estimates are based largely on households, while payroll employment comes from employers. The two measure different populations and can diverge, particularly before subsequent revisions.

Southeast Michigan: Unemployment Moves Higher

Southeast Michigan continues to show some of the clearest signs of economic pressure in the state. The seasonally adjusted unemployment rate for the Detroit-Warren-Dearborn metropolitan area rose from 5.3% in July to 5.4% in August. Employment fell by 11,000 in one month, while unemployment increased by 1,000. The region's labor force declined by 10,000.

Compared with August 2025, Detroit's unemployment rate is 0.7 percentage points higher. But Southeast Michigan differs from much of the state in one important way. The Detroit metro labor force is 27,000 larger than it was a year ago. That means the higher unemployment rate is not simply the product of people leaving the labor market. More people are participating than a year ago, but not all of them are finding jobs.

Manufacturing bears watching closely because of the region's concentration of automakers and suppliers. For an economy still heavily dependent on automobiles and advanced manufacturing, what happens to factory employment this fall could help determine whether Southeast Michigan stabilizes or weakens further.

West Michigan: Manufacturing Remains a Bright Spot

West Michigan tells a substantially different story. Grand Valley State University's monthly survey of purchasing managers found that August marked the eighth consecutive month of favorable reports for the region's industrial economy.

GVSU researcher Brian Long reported that the new-orders index remained at a strong +30, while the production index improved from +19 in July to +21 in August. The employment index increased from +6 to +11.

Business confidence also remains stronger than during 2025, despite tariffs and disruptions to global shipping.

"Both our short- and long-term measures of business confidence are still holding up," Long said. "In fact, our confidence so far in 2026 is noticeably better than it was in 2025."

Perhaps the most striking finding is that some West Michigan manufacturers are not talking about eliminating workers. They are struggling to find them. Long said respondents continue to report shortages of welders, CNC operators, technicians, mechanical engineers and industrial engineers. That creates one of this month's biggest economic contradictions. Statewide manufacturing payrolls declined in August, while some West Michigan industrial employers still cannot find enough skilled workers.

Central, Northern Michigan and the U.P.: A More Complicated Picture

The latest complete regional figures for Central Michigan are July numbers, with August local-area statistics scheduled for release Sept. 24. The July figures illustrate why unemployment rates alone do not necessarily tell whether a regional economy is expanding.

The Lansing-East Lansing area's unemployment rate stood at 4.8%, down from 5.9% a year earlier. But estimated employment was 6.6% lower than in July 2025, while the area's labor force was down 7.7%. Midland showed a similar pattern, with a 4.7% unemployment rate but estimated employment down 6.9% from a year earlier.

Northern Michigan shows another complication, seasonality. Traverse City's July unemployment rate was just 3.8%, among the lowest in the state. Employment increased 3.4% from June, while the area's labor force grew 3.3% as tourism, hospitality and recreation businesses moved through the summer season. The year-over-year picture, however, was weaker. Traverse City-area employment was estimated at 7.0% below July 2025, while its labor force was 7.4% smaller.

The Upper Peninsula's July unemployment rate stood at 5.2%, down from 6.2% in July 2025. But estimated U.P. employment was 6.1% lower than a year earlier, while its labor force was 6.9% smaller. Northern Michigan and the U.P. also benefit from a second major tourism season as winter approaches.

The Statewide Workforce Puzzle

The regional numbers expose a problem that stretches well beyond any single part of the state. In July, all 18 Michigan labor-market regions reported fewer employed residents than a year earlier, with a median decline of 6.3%. All 18 also reported smaller labor forces, with a median contraction of 7%.

The statewide August report points in the same direction, with the labor-force participation rate falling again to 58.8%. Yet employers in West Michigan continue to report shortages of skilled workers.

That raises an increasingly important question for Michigan. How can the state simultaneously have fewer people participating in the labor market and employers who say they cannot find enough qualified workers?

Part of the answer may involve skills mismatches. Other factors can include retirement and an aging population, migration, education, family responsibilities, and people who have stopped looking for work. Determining which factors matter most could become increasingly important as Michigan tries to expand advanced manufacturing, artificial intelligence, defense, aerospace and other technology-driven industries.

What to Watch Next

Michigan enters the fall with a decidedly mixed economic report card. West Michigan manufacturers continue to report healthy new orders, rising production, and demand for skilled workers. Southeast Michigan has a larger labor force than a year ago but rising unemployment. Central Michigan, Northern Michigan, and the U.P. have relatively modest unemployment rates in some areas, but their estimated employment and labor forces remain well below year-earlier levels.

Statewide, the unemployment rate has reached 5%, manufacturing lost jobs in August, and labor-force participation slipped again. The next few months should reveal whether those differences begin to narrow, or whether Michigan's regional economies continue moving in different directions.