Indian Labor Market Holds Robust Momentum

The unemployment rate in India inched higher to 4.8% in December of 2025 from the series low 4.7% touched in the previous month, aligned with market expectations and remaining well under averages from other periods. The unemployment rate for urban persons inched higher to 6.7% from 6.5%, while that of the rural population remained unchanged at 3.9%. The increase in the overall unemployment rate was aligned with a 0.3 percentage point jump in the labor force participation rate to 56.1%, a series high.

The unemployment rate in India was at 5.2% in October of 2025, remaining unchanged from the previous month to remain relatively close to the record-low of 5.1% last reached two months prior. The result reflected an initial resilience to the labor market during a month of aggressive tariffs announced by the US government on Indian goods. Unemployment inched higher for urban areas of the country (7% vs 6.8% in September), offsetting the decrease in unemployment for rural areas (4.4% vs 4.6%). In the meantime, the overall employment rate rose to 52.5% from 52.4%, while the labor force participation rate inched higher to 55.4% from 55.3%).

India’s unemployment rate rose slightly to 5.2% in September 2025 from 5.1% in August, in line with market expectations, following two consecutive months of declines. The uptick was driven by higher unemployment in rural areas (4.6% vs 4.3%) and a modest rise in urban areas (6.8% vs 6.7%). Among females, the rate increased to 9.3% in urban areas (from 8.9%) and 5.5% in rural areas (from 5.2%), while male unemployment saw moderate gains in both rural (4.7% vs 4.5%) and urban regions (6.0% vs 5.9%). Despite the rise in unemployment, the employment rate increased to 52.4% and the labor force participation rate climbed to 55.3%, marking their highest levels since April.