Iowa’s labor market is facing renewed pressure as newly released unemployment figures show the state’s jobless rate rising at a faster pace than the national average. The data, delayed because of the partial federal government shutdown, offers an important snapshot of how Iowa’s economy is responding to a mix of industrial layoffs, shifting global trade conditions, and broader national labor-market trends. With unemployment climbing to 3.7% in September 2025—up 0.4 percentage points from the previous year—the state now confronts growing economic uncertainty, particularly in key sectors such as manufacturing and business services.
These developments come at a time when U.S. unemployment has also increased, rising from 4.1% to 4.4% over the same period. Yet Iowa’s faster rate of growth in unemployment raises important questions about the underlying structural and economic forces at play. From mass manufacturing layoffs to weakened global demand for agricultural products, Iowa’s struggles reflect a combination of regional and national pressures that analysts say could continue shaping the job market into 2026.
Iowa’s Unemployment Rate: What the New Numbers Reveal
The latest figures from Iowa Workforce Development highlight a sharp rise in the number of unemployed residents in the state. Between September 2024 and September 2025, Iowa saw an increase of 8,400 jobless individuals, signaling a notable slowdown in key industries that traditionally anchor the state’s economy. These numbers are especially important given Iowa’s strong historic performance in workforce participation and job stability.
While the national unemployment rate also rose during the last year, Iowa’s increase came more rapidly. This trend has introduced new concerns for policymakers, businesses, and workers about the potential for a wider economic slowdown—especially in sectors sensitive to global market shifts and agricultural demand.
- Iowa’s unemployment rate in September 2025: 3.7%
- Increase from September 2024: +0.4 percentage points
- National unemployment increase over same period: from 4.1% to 4.4%
- Number of newly unemployed Iowans: +8,400
Why Is Iowa’s Jobless Rate Rising Faster Than the U.S. Average?
A combination of global economic pressures, domestic policy changes, and industry-specific challenges has contributed to Iowa’s accelerated unemployment growth. Many of these factors have impacted the state’s manufacturing sector more severely than the national average, triggering waves of layoffs across some of Iowa’s largest employers.
At the heart of Iowa’s labor-market difficulties is the agricultural manufacturing industry. As farmers delay major purchases due to cost pressures and lost exports, companies like John Deere and Kinze Manufacturing have been forced to scale back production. These reductions reflect broader uncertainties in global trade and rising financial strain on agricultural producers.
- Trade policy changes have reduced agricultural export volumes.
- Higher input costs have tightened farmers’ budgets, reducing demand for equipment.
- Major Iowa manufacturers have enacted mass layoffs to offset declining sales.
- Demand for business services has softened as companies cut spending.
Impact of Trade Policies and Export Declines
One of the most significant contributors to Iowa’s rising unemployment rate is the lasting impact of recent U.S. trade policies, including increased tariffs affecting agricultural goods. As Iowa’s farming sector heavily depends on international markets, disruptions in export flows deeply affect local economics. Reduced foreign demand for crops and livestock translates directly into lower farm revenues—and subsequently, reduced investment in machinery and equipment.
This ripple effect has hit manufacturing companies hard, leading to layoffs and production slowdowns. Analysts warn that unless export conditions strengthen or trade agreements stabilize, Iowa’s manufacturing sector may continue facing downward pressure in the coming quarters.
- Tariff increases have affected global agricultural buyers.
- Reduced exports have weakened farm incomes.
- Farmers are postponing capital purchases such as tractors and implements.
- Manufacturers tied to agriculture face declining order volumes and revenue.
Industries with the Largest Job Losses
Iowa Workforce Development identified three industries experiencing the most substantial employment declines over the year. The manufacturing sector suffered the heaviest losses, followed by professional and business services, and then leisure and hospitality. Each of these sectors has faced unique economic and operational challenges during the past two years, but together their declines reflect broader shifts in Iowa’s economic landscape.
- Manufacturing: -4,100 jobs
- Professional and business services: -3,200 jobs
- Leisure and hospitality: -2,500 jobs
The concentration of job losses in these areas highlights vulnerabilities in both industrial production and consumer-driven sectors. Manufacturing layoffs have pulled down overall employment figures sharply, while reduced consumer spending and business investment have weakened service-oriented industries.
Manufacturing Layoffs and Their Statewide Economic Impact
Manufacturing is one of Iowa’s most important economic pillars, supporting tens of thousands of jobs and driving billions in yearly economic output. However, the sector’s close ties to agriculture mean it is especially exposed to downturns in farming profitability. Over the past year, mass layoffs at John Deere, Kinze Manufacturing, and Bridgestone Firestone have made headlines, signaling severe distress in the sector.
These layoffs affect more than just the workers directly employed by these companies. They create a cascading economic effect, impacting suppliers, transportation firms, and local economies dependent on manufacturing wages. Analysts warn that if agricultural markets continue struggling, Iowa’s manufacturing sector may require years—not months—to fully recover.
- Equipment manufacturers rely heavily on farm profitability.
- Layoffs reduce consumer spending in rural and urban communities.
- Manufacturing slowdowns decrease demand for related services.
- Small businesses near major factories feel immediate economic strain.
Professional and Business Services: A Surprising Decline
The drop in professional and business services employment is another warning sign. These jobs often reflect corporate health and investment levels. When businesses face uncertainty, they scale back spending on administrative, consulting, and technical services, leading to reduced hiring in this sector. Some companies also pause expansion projects during unstable economic periods, further reducing demand for business services.
This trend suggests Iowa businesses may be preparing for slower economic conditions in the months ahead.
- Lower business spending reduces demand for outsourced services.
- Hiring freezes are becoming more common among mid-sized employers.
- Companies are delaying new projects and reducing contract work.
- Economic uncertainty has driven employers to cut non-essential roles.
Leisure and Hospitality: Continued Pressure Post-Pandemic
Though leisure and hospitality recovered strongly after the pandemic, the sector is once again feeling pressure. Rising consumer costs, elevated interest rates, and reduced discretionary incomes have led many families to cut back on travel and entertainment. Iowa’s hotels, restaurants, and entertainment venues have all reported financial strain during 2025.
- Reduced discretionary income affects tourism and dining.
- Seasonal hiring has slowed across the state.
- Hospitality businesses face rising labor and supply costs.
- Small venues in rural areas face higher closure risk.
Construction Emerges as a Bright Spot
Despite challenges across multiple industries, construction remains a powerful growth engine for Iowa’s job market. The industry gained 5,500 new positions over the past year—an especially notable increase given national uncertainty in the housing sector.
This growth reflects strong infrastructure investment, ongoing commercial projects, and a push to modernize facilities across municipal and corporate sectors.
- Infrastructure spending has boosted long-term construction demand.
- Commercial development continues in urban centers like Des Moines.
- Public-sector projects have helped stabilize employment.
- Demand for skilled construction labor remains high across the state.
Economic Outlook for Iowa in 2026
Looking ahead, Iowa’s economic outlook will depend heavily on developments in global trade, agricultural markets, and national economic conditions. If trade relationships stabilize and export levels recover, manufacturers may begin rehiring and production could rebound. Conversely, continued tariff pressures or a national slowdown could further elevate unemployment.
Construction is expected to remain strong, but other industries—especially manufacturing—may face extended recovery timelines depending on economic policy shifts and global demand fluctuations.
- Manufacturing is at risk unless agricultural demand strengthens.
- Service sectors may rebound if consumer confidence improves.
- Construction growth likely to continue due to infrastructure investment.
- Higher interest rates could slow business expansion plans.
Conclusion
Iowa’s rising unemployment rate signals a challenging period for the state’s economy. While the national labor market also faces pressures, Iowa’s faster increase in joblessness highlights deeper structural vulnerabilities tied to agriculture, global trade, and changing demand patterns in key industries. As employers, workers, and policymakers assess the road ahead, the state’s economic resilience will depend on its ability to adapt to shifting global conditions and support workers impacted by large-scale industrial changes.
FAQ
Why is Iowa’s unemployment rate rising faster than the national average?
Because of large manufacturing layoffs, weaker farm revenues, and reduced export demand, Iowa has experienced greater labor-market stress than many states.
Which industries lost the most jobs in Iowa?
Manufacturing, professional and business services, and leisure and hospitality saw the largest employment declines.
How have trade policies impacted Iowa workers?
Increased tariffs and weakened global demand have hit agricultural exports, reducing farm income and leading to layoffs at major manufacturing companies.
Which sector is growing in Iowa?
The construction sector added 5,500 jobs, making it the strongest-performing industry in the state.
Will Iowa’s unemployment rate continue rising in 2026?
It depends on trade conditions, agricultural recovery, and national economic trends. Manufacturing remains the most vulnerable sector.