HARRISBURG, Pa. — Pennsylvania's unemployment rate fell to 3.7% in August, its lowest level in more than two years, as both employment and the state's labor force reached record highs.

The Pennsylvania Department of Labor & Industry reported Friday that the unemployment rate declined from 3.9% in July and 4.4% in August 2025.

Pennsylvania's rate was also below the national unemployment rate of 4.1%, which remained unchanged in August.

The headline figures show improvement in several measures of the state's labor market, but the industry data present a more uneven picture. Employment and the labor force increased while much of Pennsylvania's recent job growth remained concentrated in education and health services and leisure and hospitality.

Labor force and employment reach record highs

Pennsylvania's civilian labor force, which includes residents who are working or actively looking for work, increased by approximately 8,000 people in August to a record 6.659 million.

The number of employed Pennsylvania residents rose by about 20,000 to a record 6.409 million, while the number classified as unemployed declined by approximately 11,000 to 250,000.

The combination is notable because a falling unemployment rate can sometimes result from people leaving the labor force and no longer looking for work. That was not the case in Pennsylvania in August. The labor force grew, employment increased and the number of unemployed residents declined.

The state's unemployment rate is now seven-tenths of a percentage point below its August 2025 level of 4.4%.

The U.S. Bureau of Labor Statistics reported that Pennsylvania was one of eight states, along with the District of Columbia, to record a statistically significant decline in its unemployment rate during August.

Payroll growth was more modest

Pennsylvania employers reported approximately 6.207 million nonfarm payroll jobs in August, an increase of 5,800 from July.

Compared with August 2025, Pennsylvania had approximately 34,600 more payroll jobs, an increase of about 0.6%.

The monthly increase should still be interpreted cautiously.

BLS classified Pennsylvania's overall payroll employment change as essentially unchanged after accounting for statistical uncertainty. Nationally, payroll employment increased significantly in only four states during August and was essentially unchanged in the other 46 states and the District of Columbia.

The unemployment figures and payroll-job figures come from different surveys.

Labor-force and unemployment estimates are based primarily on a household survey and measure people according to where they live. Payroll employment estimates come from a survey of employers and count jobs according to where establishments are located.

The two measures can therefore move differently during the same month.

Job growth remains concentrated

Seven of Pennsylvania's 11 major industry groups added payroll jobs in August.

Trade, transportation and utilities recorded the largest monthly increase, adding approximately 1,700 jobs. Leisure and hospitality added about 1,300, while education and health services added approximately 1,000.

Financial activities, education and health services, and leisure and hospitality each reached record-high employment levels in the state's preliminary August estimates.

The year-over-year figures show that a significant share of Pennsylvania's job growth has come from a relatively small number of industries.

Education and health services employed approximately 23,600 more workers in August than one year earlier, reaching roughly 1.423 million jobs statewide.

Leisure and hospitality added approximately 12,400 jobs over the same period.

Professional and business services increased by about 4,600 jobs, financial activities added roughly 3,500, and manufacturing employed approximately 2,200 more workers than it did in August 2025.

Those increases were partially offset by declines elsewhere.

Government employment was approximately 4,100 jobs lower than a year earlier. Trade, transportation and utilities was down about 4,000. Construction and information employment were each approximately 2,900 jobs below their August 2025 levels.

Maisum Murtaza, a research analyst at the Harrisburg-based Keystone Research Center, said the statewide unemployment figure masks significant differences among industries.

"When you pull apart the unemployment rate, you can see that the gains are a bit uneven," Murtaza told the Altoona Mirror.

Murtaza said education and health services and leisure and hospitality have led Pennsylvania's job growth since the beginning of 2025.

He also pointed to weaker performance over that longer period in manufacturing, trade, transportation and utilities, and government employment.

That does not conflict with the latest year-over-year manufacturing figures. Manufacturing employment was approximately 2,200 jobs higher in August 2026 than in August 2025. Murtaza's comparison uses a longer period beginning in January 2025, illustrating how the picture can change depending on the starting point used.

Manufacturing and construction remain mixed

Pennsylvania's goods-producing industries lost approximately 700 jobs between July and August.

Manufacturing employment declined by roughly 200 jobs during the month, even though the sector remained approximately 2,200 jobs above its August 2025 level.

Construction employment declined by approximately 300 jobs in August and was down roughly 2,900 compared with a year earlier.

The figures illustrate the uneven nature of the current labor market. Pennsylvania can simultaneously have a low statewide unemployment rate and record employment while individual industries remain flat or lose jobs.

The statewide numbers also cannot establish what happened during August in individual counties or metropolitan areas.

Pennsylvania's local-area employment data for August are scheduled for release Sept. 29. Those figures will provide a clearer picture of labor-market conditions across individual regions of the Commonwealth.

What comes next

Pennsylvania's next statewide employment report is scheduled for Oct. 16 and will provide preliminary figures for September.

Among the trends to watch will be whether the unemployment rate remains below 4%, whether the labor force continues to grow and whether employment gains begin to spread more broadly across industries.

Manufacturing and construction will also bear watching after their mixed August performance.

For now, the August report shows a Pennsylvania labor market with lower unemployment, record employment and a record-size labor force, while payroll growth remains modest and uneven across major industries.