Unemployment rate rose to 5.6 percent in May compared with 5.1 percent in April, according to data released by the government on June 16.
Women had a higher unemployment rate compared with men at 5.7 percent, up from 5 percent in the previous month, whereas male unemployment rose to 5.6 percent compared with 5.2 percent in the previous month.
Rising unemployment doesn't bode well for the economy, which rose 7.6 percent in the fourth quarter of FY25, raising expectations for the April-March period.
Data released over the last two months show formal market performing well. GST collections have averaged over Rs 2 lakh crore for April and May—the highest ever.
UPI transactions touched over Rs 25 lakh crore in May, indicating a strong growth.
Youth unemployment jumps faster
Unemployment among the youth increased faster to 15 percent compared with 13.8 percent for both urban and rural areas.
Female unemployment among the 15-29 year olds increased faster to 16.3 percent from 14.4 percent in April.
The rise in unemployment corresponds with more women exiting the workforce, further deteriorating the situation.
Labour force participation among young women dipped to 22.4 percent from 23.1 percent in the previous month, bringing down overall female labour force participation to 25.5 percent from 26.2 percent.
“Decline in female LFPR, especially in rural areas (more than 1 percentage point) due to fewer women working as casual labourers and unpaid helpers. Reduction in agricultural activities with the end of Rabi harvest season for both male and female in the rural areas may have brought about the downward shift in number of workers,” the government release stated.
The decline was led by rural areas, where labour force participation for women declined a percentage point to 27.8 percent. In urban areas, the decline was less pronounced at 20.2 percent from 20.5 percent for women earlier.
Rural areas recorded a faster increase in unemployment than urban areas, as the rate rose 0.6 percentage point to 5.1 percent. Urban unemployment went up to 6.9 percent from 6.5 percent in the previous month.
“The decline in LFPR and workers participation rate and the rise in unemployment rate were driven largely by seasonal agricultural patterns, higher summer temperature experienced in May in some parts of the country due to which physical outdoor work gets limited and movement of some unpaid helpers to domestic chores, especially in the higher income (top 3 decile) rural households,” it further added.
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