Two employment reports released by the Illinois Department of Employment Security (IDES) in the past two weeks have put Chicago’s labor market in sharp relief: strong enough to reach a milestone, but facing pressure from outside the city’s control.
The April 9 IDES metro report confirmed that the Chicago area opened 2026 with a record number of monthly jobs and nearly five years of consecutive year-over-year growth. Then, on April 16, the statewide employment report arrived with a more complicated message: February payrolls fell by 17,800 jobs, and the unemployment rate climbed to 5.0% statewide — a number that will matter to workers, small businesses, and policymakers tracking the local economy heading into the second quarter.
What the Record Actually Represents
Over-the-year, total nonfarm jobs decreased in 9 metropolitan areas and increased in 3 across Illinois, with Chicago posting 18 consecutive months of year-over-year growth and Lake County posting 7 consecutive months. That kind of sustained metro-area job growth — running uninterrupted through federal shutdowns, tariff battles, and a presidential transition — reflects a genuine underlying resilience in the Chicago economy.
The drivers of that growth have been concentrated in health services, government employment, and education — sectors that have largely insulated Chicago from the broader volatility hitting trade-dependent and manufacturing-heavy regions of the state. Chicago’s role as a services hub, financial center, and home to major healthcare systems gave the metro area insulation that downstate markets have not had.
Deputy Governor Andy Manar said at the time: “Chicago’s job market continues to stand out, with a year and a half of consecutive job growth and a steady unemployment rate.”
February’s Numbers Tell a Different Story
The April 16 statewide report, however, showed that February did not hold the momentum. Total nonfarm payrolls decreased over-the-month in February, down 17,800, or 0.3 percent, to 6,137,200. The January monthly change in payrolls was also revised downward, from an initially reported +18,000 to just +6,200.
The sectors that lost the most ground reflect some of Chicago’s core industries. The industry sectors with the largest monthly payroll jobs decreases included construction (-4,900), trade, transportation and utilities (-4,800), and information (-2,800).
For a city built on the movement of goods — through O’Hare, through the rail corridors, through the port — a pullback in trade and transportation is not an abstraction. It affects warehouse workers, freight operators, drivers, and the small businesses that depend on regional logistics to move their products. Construction’s drop of nearly 5,000 jobs also carries weight in a city that has been navigating an ongoing affordable housing shortage and a multi-year infrastructure backlog.
The number of unemployed persons in February was 328,400, up 3.0 percent from January, and up 5.6 percent over the same month one year ago.
The Federal Connection
Illinois Deputy Governor Andy Manar attributed the softening to “economic instability coming out of Washington right now,” citing the Trump administration’s policies as creating “real headwinds for states and working families across the country.”
That framing is backed by independent economic projections. A February 2026 forecast prepared by Moody’s Analytics for the Illinois Commission on Government Forecasting and Accountability projected that payroll employment will be essentially flat from Q4 2025 to Q4 2026, while the nation will see 0.3 percent growth. Household employment will decline, pushing the state’s unemployment rate to 5.2 percent by year’s end — higher than both the regional and U.S. rates.
The same report cited federal layoffs, deportations, cuts to entitlement spending, and tariffs as compounding factors. Moody’s found that Illinois will suffer from the combined effects of these pressures, and that the Trump administration’s tax and spending bill will cause an above-average decline in federal healthcare spending in the state.
Illinois had already seen the tariff impact in its agricultural sector. China boycotted U.S. soybeans in 2025 in response to tariffs, contributing to losses for Illinois farmers. On the household side, the average Illinois household faces $3,400 in increased annual costs, while unemployment claims in Illinois have risen by 16 percent in the last year.
What It Means for Chicago Going Into Q2
The divergence between January’s milestone and February’s decline is not necessarily a trend reversal — it may reflect the kind of month-to-month volatility that employment data regularly produces, particularly when the underlying economic environment is shifting. January revisions downward, combined with February’s payroll drop, suggest that the pace of job creation was softer than initial reports indicated.
For Chicago specifically, the sectors that held up through five years of consecutive growth — healthcare, education, professional services — have not collapsed. But the sectors that connect the city’s economy to goods, trade, and physical infrastructure are showing signs of stress, and those sectors tend to employ workers who feel economic shifts most directly.
Illinois’ real GDP growth rate since 2019 has run at just 8.2 percent, less than half the national 17.7 percent, and that gap is projected to continue — with the Commission on Government Forecasting and Accountability projecting Illinois at 1.6 percent growth in 2026 versus a U.S. projected rate of 2.6 percent.
Chicago’s record job count in January was earned across years of sustained growth. Holding it in the months ahead will depend, in part, on what happens in Washington.
The full IDES employment reports are available at ides.illinois.gov.
