by Timothy McQuiston, Vermont Business Magazine Vermont initial weekly unemployment claims fell slightly and are holding at under 400. For the week ending January 31, 2026, the Vermont Department of Labor reported that there were 357 new claims, down 28 from the previous week and up 30 from last year at this time. New claims are at typical seasonal levels, but ongoing claims remain high. Total claims were 4,293, down 35 from the week before and are up 208 from last year at this time. Claims, which tend to be lowest in the summer, were 186 in September 2025.
Claims tend to spike around the holidays with temporary hires and layoffs.
In Vermont for the weekly labor UI claims report, manufacturing accounted for 11% of the total, down 1 point 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 35% from the previous week, down 4 points. Construction was 33%, down 2 points.
Service hiring is strong during the holidays then slumps, while cold weather slows down construction.
The Vermont Unemployment Trust Fund is well capitalized. As of the most recent data, there was $317.2 million in the Trust Fund, down $1.9 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.
Vermont tax revenues hover just below targets
Secretary of Administration Sarah Clark on February 20 released Vermont’s revenue results for January 2026, which showed the General Fund again lagged behind targets. The Corporate tax was well below expectations, but the Personal income tax bounced back and is now just ahead of expectations for the year. The Transportation Fund also missed its monthly targets, while the Education Fund exceeded its monthly target. Consumption taxes had an overall good month, which reflects on travel and tourism.
The State’s General Fund, Transportation Fund, and Education Fund receipts were a combined $378.85 million, representing collections -$0.33 million, or 0.09% below the $379.17 million monthly target from the updated consensus forecast as adopted by the Emergency Board at its January 16, 2026, meeting.
Total General Fund revenues for January were $274.03 million, -$1.41 million or 0.5% below the $275.44 million monthly cash flow target, driven by a third month of lagging Corporate Income Tax receipts.
Revenues in the Transportation Fund were $22.8 million, representing collections -$0.5 million or 2.1% below target, with receipts in the Purchase & Use and Motor Vehicle fees finishing below their respective January targets.
Monthly Education Fund revenues of $82.02 million were $1.56 million, or 1.9%, above their January cash flow target of $80.46 million, with all components except for Motor Vehicle Purchase & Use finishing ahead of monthly consensus targets.
Vermont’s unemployment rate holds at 2.6 percent in December
The Vermont Department of Labor has reported that the seasonally adjusted statewide unemployment rate for December was 2.6%. This reflects no change from the prior month’s revised estimate. Vermont has the third-lowest rate in the nation behind a tie behind Hawaii and South Dakota (2.2%). California has the highest rate at 5.5%.
The comparable United States rate in December was 4.4%, a decrease of one-tenth of one percentage point from the revised November estimate.
The civilian labor force participation rate was 64.0% in December, a decrease of two-tenths of one percentage point from the prior month’s revised estimate.
The data continues to show significant reductions in the Labor Force and Employed month-to-month and year-to-year. The Labor Force is the denominator in the equations, so when it goes down it minimizes the losses in the Employed category. The number of Unemployed is essentially unchanged.
See data tables below.
"The Vermont Department of Labor works directly with employers to help them hire, retain, and support the workers they need to succeed,” said Kendal Smith, Vermont Department of Labor Commissioner. “At the same time, we are helping Vermonters connect with available job opportunities as labor market conditions shift. Maximizing every working Vermonter’s potential helps workers build sustainable careers while strengthening and stabilizing Vermont businesses. Through partnerships with local Department of Labor offices (https://labor.vermont.gov/workforce-development/job-centers), businesses can access customized services and resources, while workers can explore additional training or education options to support their next steps.”
The seasonally adjusted Vermont data for December show the Vermont civilian labor force decreased by 1,171 from the prior month’s revised estimate. The number of employed persons decreased by 1,207 and the number of unemployed persons increased by 36. The changes to the labor force and the number of employed persons were statistically significant in the seasonally adjusted series.
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