After a year of steady unemployment, Tennessee began 2026 with a slight decline in its unemployment rate from the previous month, according to data from the Tennessee Department of Labor and Workforce Development (TDLWD).

The state’s seasonally adjusted unemployment rate for January was 3.5%, down one-tenth of a percentage point from December. The rate was also 3.5% a year ago. Tennessee continues to outperform the national unemployment rate, which was 4.3% in January.

Throughout 2025, the statewide unemployment rate remained stable, ranging from 3.5% to 3.7% each month.

Over the past year, Tennessee employers added 5,900 nonfarm jobs. The largest increases were in the health care and social assistance sector, followed by state government and then the arts, entertainment, and recreation sector.

Over the month, total nonfarm employment increased by 7,200 jobs, with the largest gains in private education and health services, professional and business services, and financial activities.