by Timothy McQuiston, Vermont Business Magazine Vermont weekly unemployment claims jumped last week and are at their usual and relatively high and volatile level for the end of holiday season. For the week ending December 27, 2025, the Vermont Department of Labor reports that new claims were 914. New claims were up 321 from the week before and are up 16 from last year at this time. Claims, which tend to be lowest in the summer, were 181 at the end of September 2024 and 186 last September. Claims tend to rise and fall around the holidays with temporary work hires and layoffs.
The Vermont DOL also is reminding employers that beginning January 1, 2026, Vermont’s minimum wage will increase from $14.01 to $14.42 per hour - an increase of $0.41.
Meanwhile, the Federal Reservice Bank lowered interest rates December 10 as expected 25 basis points, in a split vote, with one Trump appointee calling for 50 basis points and two others voting for no change. Employment data indicates weakness. Meanwhile, inflation fell another one-tenth to 2.7%, though that drop could be due to a "technical factors." While the inflation mark is higher than the 2.0% Fed target, Fed governors appear to have weighed the economic uncertainty greater than the inflation level (the Fed raised rates seven times in 2022 from 0.25% to 4.5% to combat spiking inflation while the underlying economy remained strong; the Fed could decide that the reverse is the case now and cut rates further in 2026).
The US unemployment rate rose two-tenths to 4.6% in November, its highest rate in four years.
Adding to the uncertainty mix, Fed Chair Jerome Powell said the economy was relatively strong, which would have suggested that the rate not change given the inflation number. Powell's term ends early next year. The cut decreased the Fed’s federal funds rate down to a range of 3.50% to 3.75%, the lowest it has been since 2022. There is general consensus that the rate will not come down at the next meeting.
The stock market at first jumped at the rate-cut news, wobbled as AI values fell before finishing the holiday week slightly up on the usual tepid holiday trading.
In Vermont for the weekly labor UI claims report, manufacturing accounted for 14% of the total, down 3 points from the previous week. Manufacturing overall has become a smaller part of the Vermont economy over the last 25 years and that trend appears to be continuing. The Service industry, which typically accounts for the most claims, last week reported 38% from the previous week, down 10 points. Construction was 18%, down 12 points.
Service hiring is strong during the holidays then slumps, while cold weather slows down construction.
For the week, Vermont total unemployment insurance claims were 4,005 (up 458 for the week and up 264 from this time last year).
The US DOL report for the week ending December 27, 2025, indicates a decrease in initial jobless claims by 16,000 to 199,000. This figure is below market expectations of 220,000 and marks the lowest level since January, excluding the seasonally volatile Thanksgiving week. The 4-week moving average was 218,750, an increase of 1,750 from the previous week's revised average. The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending December 20, unchanged from the previous week's revised rate. The advance unadjusted insured unemployment rate was 1.2 percent during the week ending December 20, a decrease of 0.1 percentage point from the prior week.
Reuters reported that the last labor report for 2025 reinforces the image of a bumpy year for American labor.
Meanwhile, the Vermont Unemployment Trust Fund is well capitalized. As of the most recent data, there was $321.8 million in the Trust Fund, down nearly $1.5 million from the previous week (as claims are paid out on one side, employers are contributing to the fund on the other). The pre-pandemic Trust Fund balance on March 1, 2020, was $506.2 million.
The US DOL has resumed collecting labor information following the end of the government shutdown.
Vermont’s unemployment rate held at 2.5% in September as numbers sour
The Vermont Department of Labor on December 11 reported the seasonally adjusted unemployment rate for September 2025 was 2.5%. This reflects no change from August’s revised estimate. However, the Labor and Employment indicators both fell.
Vermont has the second lowest rate in the nation, tied with Hawaii and five-tenths below South Dakota. California is highest at 5.6%. The comparable United States rate in September was 4.4 percent, an increase of one-tenth of one percentage point from the revised August estimate.
The civilian labor force participation rate was 64.4 percent in September, a decrease of two-tenths of one percentage point from the prior month’s revised estimate.
The government shutdown from October 1 to November 12, 2025, the longest in U.S. history, disrupted labor data accrual.
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