India’s unemployment rate eased to 5.2 percent in the July–September quarter of FY26, down from 5.4 percent in the previous quarter, driven largely by stronger rural employment during the Kharif season, according to data released by the National Statistical Office (NSO) on November 10.
The Periodic Labour Force Survey (PLFS) data revealed contrasting trends across regions. Rural unemployment declined to 4.4 percent from 4.8 percent in the April–June quarter, while urban unemployment edged up to 6.9 percent from 6.8 percent, indicating a mild slowdown in hiring in city-based services and manufacturing sectors.
Rural rebound lifts overall jobs data
The improvement in rural employment coincided with the Kharif sowing period. The proportion of rural workers engaged in agriculture rose to 57.7 percent in Q2FY26, up from 53.5 percent in the previous quarter.
In urban areas, employment in the tertiary sector—including trade, transport, and education—inched up to 62 percent, compared with 61.7 percent in Q1FY26, reflecting stable demand in services even as formal hiring slowed marginally.
Labour participation improves
The Labour Force Participation Rate (LFPR) improved slightly to 55.1 percent, from 55.0 percent in the previous quarter, with both rural and urban areas showing small gains. Among women, participation continued its upward trend, rising to 33.7 percent from 33.4 percent a quarter earlier.
The Worker Population Ratio (WPR)—the share of employed persons in the working-age population—also inched up to 52.2 percent from 52.0 percent.
Women’s participation keeps rising
A key feature of the quarter was the continued increase in female workforce participation, particularly in rural India. Women’s LFPR in rural areas climbed from 37.0 percent to 37.5 percent, while their WPR rose to 32 percent, reflecting higher engagement in both agricultural and self-employment activities.
Job quality trends mixed
Indicators of employment composition showed mixed trends. Self-employment in rural areas surged to 62.8 percent from 60.7 percent, suggesting rising informal or family-based work. Regular wage and salaried employment in urban areas saw a modest rise to 49.8 percent from 49.4 percent, signalling relative stability in formal jobs. The share of casual labour fell marginally in both rural and urban regions, pointing to a gradual shift toward more stable work categories.
Growth momentum moderates
The labour market data come amid signs that India’s economy likely grew around 7 percent in the second quarter, slower than the 7.8 percent expansion recorded in the previous quarter, as per Reserve Bank of India (RBI) estimates.
While the moderation in urban hiring suggests some cooling in formal employment, rising rural and female participation indicate that India’s labour market continues to broaden even as growth normalises.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
