Jobless rate falls to 5% in August

India’s headline unemployment rate came in at 5% in August, marginally lower than the 5.1% figure in August last year, but increased by half a percentage point for the younger 15-29 years age group to 15.1%. This makes August at least the fourth consecutive month when headline unemployment rate has declined compared to previous year and at least the fifth consecutive month when youth unemployment rate has increased compared to previous year.

These numbers are from the monthly bulletin of the Periodic Labour Force Survey (PLFS) published by the National Statistics Office (NSO) on Tuesday. Since monthly bulletins are available are only from April 2025, year-on-year trends can only be tracked from April 2026. Youth unemployment has increased year-on-year every month in this period, while overall unemployment rate has fallen marginally from May. Labour market indicators are generally compared year-on-year to account for seasonality of some jobs, such as those in agriculture.

To be sure, bump in youth unemployment rate in August was slower compared to earlier. The 15-29 age group’s unemployment rate increased by 1.5 percentage points in April (partly due to a low base), but by 0.9 percentage points in the next two months, 0.7 percentage points in July, and 0.5 percentage points in August. The slow growth in August unemployment was not due to a base effect. On the other hand, the headline unemployment rate has fallen year-on-year by a consistent 10 basis points – one basis point is one hundredth of a percentage point – every month from May onwards.

Another statistic that makes the continuous rise in youth unemployment relatively less adverse for August is that it was the first time in five months that the labour force participation increased for youth. The share of people working or looking for a job – called labour force participation rate (LFPR) – increased year-on-year by 10 basis points in August for the 15-29 age group. From April to June, LFPR for the age group had declined 1.5 percentage points, 1.7 percentage points, and 70 basis points. It was flat in July 2026 compared to July 2025. In other words, while unemployment rate for youth was increasing from April to July despite fewer people seeking jobs, it increased slowly in August despite more people seeking jobs.

Similarly, the overall decline in unemployment rate is better news than it looks because it came on with rising LFPR. Headline LFPR increased by 0.9 percentage points in August compared to 0.0-0.8 percentage point growth in the previous three months.

A breakup by location shows that headline rural unemployment declined by 20 basis points year-on-year to 4.2%. Rural LFPR increased by 1.4 percentage points in the same time frame to 43.4%. Urban unemployment rate, on the other hand, increased by 10 basis points to 6.8% in August. This happened despite urban LFPR falling by 20 basis points to 40.2%.

In the 15-29 age group, rural unemployment rate increased by 30 basis points to 13.3% and LFPR increased by 10 basis points to 40.9%. Urban unemployment rate increased by 70 basis points to 18.7% and LFPR decreased by 10 basis points to 41.6%.