Connecticut added 500 jobs in May even as private-sector employment declined by 800 and unemployment rose to 5.1 percent, according to the Connecticut Department of Labor’s State of Connecticut Labor Situation report released June 22.
The headline gain was driven entirely by the government category. Government payrolls rose by 1,300 in May, more than offsetting the private-sector decline, including a 1,000-job increase in local government as schools resumed full schedules after spring vacation.
The year-over-year view is more mixed. Private-sector employment was 8,400 jobs higher than a year earlier, despite May’s monthly decline. Government employment, by contrast, remained 2,000 jobs below its May 2025 level, with federal employment accounting for half of that gap.
Unemployment tells a more concerning story. Connecticut’s rate rose from 5.0 percent in April to 5.1 percent in May, up from 3.8 percent a year earlier. The national rate held at 4.3 percent, marking the fifth consecutive month Connecticut’s rate has exceeded it.
The state’s labor force was approximately 37,700 people smaller than a year ago. The number of employed residents fell by roughly 60,900 over the year, while the number counted as unemployed increased by about 23,200.
Initial unemployment claims remain low, which the Department of Labor says suggests the rise in unemployment is not being driven by layoffs.
The payroll and household surveys measure different things: One counts jobs located in Connecticut, while the other measures the employment status of Connecticut residents. Together, they present a state with more payroll jobs than a year ago but fewer residents working.
Private-sector growth over the past year was heavily concentrated. Health care and social assistance added 7,200 jobs, accounting for roughly 86 percent of Connecticut’s net private-sector increase. Manufacturing added 4,700 jobs, while construction gained 1,000.
But retail lost 2,100 positions. Accommodation and food services lost 2,600. Finance and insurance declined by 800, professional, scientific and technical services fell by 800, and private education lost 900.
The Department of Labor noted that the annual comparison was affected by a major defense-industry strike that reduced employment by approximately 3,000 jobs in May 2025, which flatters some of the year-over-year figures.
May itself was weak across most sectors. Only three of Connecticut’s ten major industry categories added jobs. Professional and business services lost 1,000 positions. Trade, transportation and utilities lost 700. Construction declined by 300. Information and financial activities each lost 200, while manufacturing lost 100.
Private-sector earnings also failed to keep pace with inflation. Average hourly earnings rose 2.5 percent over the year, from $38.89 to $39.87. Average weekly hours slipped from 33.4 to 33.3, leaving average weekly earnings up 2.2 percent, from $1,298.93 to $1,327.67.
The national Consumer Price Index rose 4.2 percent over the same period.
That gap is worth noting alongside the General Assembly’s recently approved wage agreements covering approximately 42,000 unionized state employees. Those agreements provide 2.5 percent general wage increases in fiscal years 2026, 2027 and 2028.
Many eligible employees also will receive annual step increments. The CT Mirror reported that a typical step adds roughly 2 percentage points, though the amount varies by bargaining unit. An employee receiving both would see a combined increase of approximately 4.5 percent, roughly double the 2.2 percent rise in average private-sector weekly earnings.
The comparison is not exact. The private-sector figure covers May 2025 through May 2026, while the first state raise took effect retroactively on July 1, 2025. The two workforces also differ in occupation, experience, hours and benefits.
Supporters of the agreements argue the raises are necessary to recruit and retain employees and reduce costly vacancies and overtime — concerns that are legitimate on their own terms.
So is the condition of the private economy that helps finance those commitments.
The Department of Labor reported that Connecticut has added more than 7,000 jobs so far in 2026 and that total payroll employment reached an all-time high. Monthly estimates are also preliminary and best evaluated over several months rather than in isolation.
But May’s report contains warning signs. Private-sector employment declined during the month. Most major industries lost jobs. Unemployment moved further above the national rate. The labor force was substantially smaller than it was a year earlier, and average private-sector weekly earnings lost ground to inflation.
Hartford can point to the headline number. The rest of the picture is what Connecticut workers and businesses are actually living with.
