Hawaii’s unemployment rate dropped in August to a 17-month low of 7% — its seventh consecutive monthly decline — while job growth stalled due to a larger-than-typical summertime release of workers in the Department of Education.

The seasonally adjusted jobless rate declined three-tenths of a percentage point from 7.3% in July, according to data released Thursday by the state Department of Business, Economic Development and Tourism. A decline of 5,700 nonagricultural payroll jobs in August from the previous month was primarily due to the contraction in the DOE staff.

“The labor market continues to improve with increases in labor force and employment and the reduction in unemployment,” DBEDT chief economist Eugene Tian said in an email. “The data indicates that most of the employment gains were with self-employment.”

Tian said state government jobs — mainly from the DOE — accounted for 86% of the total decline in the workforce.

“I am not sure why the DOE jobs decreased in August while schools opened that month,” he said. “Retirement and resignations might be the reasons. Starting Aug. 13, state employees are required to provide vaccination records or conduct weekly testing in order to report to work, including teleworking. This mandate might have impacted the state employment.”

Hawaii’s jobless rate still trails the U.S. rate, which fell in August to 5.2% from 5.4%. However, Hawaii continues to distance itself from once having the highest unemployment rate in the country. As of July, Nevada had the highest jobless rate of 7.7% with California, New Mexico and New York tied for second at 7.6%. The U.S. Department of Labor will release the August numbers for all the states today.

Tian said even though the delta variant surged in Hawaii in August, the labor market might be affected this month because of new restrictions that became effective this week.

“However, since more and more people are getting vaccinations, the governor has no plan to lock down, and the delta variant infections are slowing down, I don’t expect the impact on the labor market will be significant,” Tian said.

On Monday, Honolulu Mayor Rick Blangiardi’s new restrictions began under a 60-day Safe Access O‘ahu program in which people need to show proof of vaccination or a negative COVID- 19 test within the past 48 hours to enter restaurants, bars, indoor gym facilities, entertainment and recreational settings. Last month, Gov. David Ige announced new statewide restrictions on the size of local gatherings in which no more than 10 people can gather indoors and no more than 25 people outdoors. Indoor capacity also was set at 50% for bars, restaurants and gyms; and vaccine and testing requirements for state and county workers were imposed.

Maui Mayor Mike Victorino implemented Safer Outside emergency rules for the county on Wednesday that will be effective for 30 days and limit social gatherings to five people inside and 10 outside unless part of the same household. The county also requires patrons of restaurants, bars and gyms over age 12 to show proof of vaccination to enter. The rules also limit capacity indoors at restaurants, bars and gyms to 50%, and require restaurants and bars to close by 10 p.m.

Tian said the various restrictions will affect the labor market negatively but the magnitude will be small because of the increased vaccination rate and because no business lockdown is planned, workers can work from home, and both residents and visitors are experienced with the new rules.

As recently as May 2020, the state’s unemployment rate stood at a record 21.9% during the early stages of the COVID-19 pandemic. The last time the jobless rate was lower than 7% was in March 2020 when it was at 2.1% during the pandemic’s infancy.

DBEDT forecast on Aug. 26 that Hawaii’s unemployment rate will be 7.6% for 2021 and 6.4% for 2022. Year-to-date through August, the unemployment rate is 8.4%.

“We expect the unemployment rates will improve in November and December this year when tourism industry recovery resumes,” Tian said.

In August’s unemployment data, Hawaii’s labor force — which includes those who are employed, those who are unemployed but actively seeking work and those who are self- employed — rose to 647,350 from 645,950 in July.

The number of people employed rose to 601,800 — the highest since March 2020 — from 598,750.

Those unemployed declined to 45,550, the lowest since the beginning of the pandemic, from 47,200.

For nonagricultural payroll jobs, the trade, transportation and utilities sector showed the largest gain last month with 300 jobs while leisure and hospitality, which had been showing strong gains with the rebound in tourism, added just 100 jobs.

“Most of the job loss in August was from the state government,” Tian said. “The private sector had some small-scale job declines at 600 in August. Overall, the payroll job change in the private sector in August was not significant.”

Nonagricultural payroll jobs are calculated from a mail survey of employers and are considered a better indicator of job growth because there is a larger sample size than the labor force data, which is compiled from a telephone survey of households.

The jobless rate fell in the state’s four major counties in August from the previous month. State and national labor force data is adjusted for seasonal factors, but the county jobs data does not take into account variations such as the winter holiday and summer vacation seasons.

Honolulu County’s jobless rate fell to 6.1% from 6.2%, Hawaii County’s rate dropped to 6.6% from 6.9%, Kauai County’s rate decreased to 8.9% from 9.6% and Maui County’s rate sank to 8.5% from 9.1%. In Maui County, Maui’s rate fell to 8.7% from 9.3%, Molokai’s rate declined to 7.9% from 8.5% and Lanai’s rate edged down to 3.5% from 3.8%.