Unemployment rate rises to 8% in November as job creation remains uneven, says latest CMIE data | The Financial Express

Unemployment rate rises to 8% in November as job creation remains uneven, says latest CMIE data

The unemployment rate as per the 30-day moving average has been moving up since the middle of November and crossed 8% towards the end of the month.

Unemployment rate rises to 8% in November as job creation remains uneven, says latest CMIE data
The CMIE all-India unemployment rate shot up to 8% in November, its highest level since August, when it had touched 8.28%.

Job creation remained uneven while inflation for industrial workers continued to rise, as per separate indices, signalling a potential worsening of the labour situation. Already, depressed rural wages and mixed trends in formal-sector job creation have raised concerns whether the spurt in private consumption record-ed in the second quarter of the fiscal will continue in the months ahead.

The CMIE all-India unemployment rate shot up to 8% in November, its highest level since August, when it had touched 8.28%. It stood at 7.77% in October. Urban unemployment shot up in November to 8.96%, though rural unemployment dipped to 7.55%. In October, urban unemployment was 7.21% and rural unemployment was 8.04%.

The unemployment rate as per the 30-day moving average has been moving up since the middle of November and crossed 8% towards the end of the month.

Meanwhile, the Naukri JobSpeak index revealed that hiring activity has recovered to pre-festive level and grew by 27% month on month in November this year. “While the overall picture looks healthy at a monthly level due to post-festive recovery, a deeper analysis at the sector level reveals mixed trends compared to the boom times of the first half of this year that witnessed high growth in hiring activity,” it said, adding that hiring in sectors including IT, education and retail sector declined.

Meanwhile, retail inflation for industrial workers, as captured by the Labour Bureau, remained above 6% in October although it eased marginally from September.

Consumer price inflation for industrial workers for October 2022 stood at 6.08%, compared to 6.49% in September and 4.52% during the corresponding month a year before. Food inflation remained high at 6.52% in October although it was marginally lower from 7.76% in September. Food inflation was at 2.2% in October 2021. Retail inflation for industrial workers has remained consistently high due to higher food prices and has been on a rising trajectory since August this year. It had crossed the 6% mark in June 2022, when it rose to 6.16%.

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Analysts have warned lower formal sector employment and subdued rural wages could prove to be a dampener on consumption. “Improving contact-intensive services amid stable urban consumption demand could continue at a slower pace for some more time,” said a report by Emkay Global Financial on the Q2 GDP data, adding that its channel checks depict mixed demand trends during the recent festive season.

Formal sector employment growth seems to be reducing, indicated by the sequential fall in new EPFO payrolls and the Naukri Job index. Additionally, subdued real rural wage growth may further impact rural consumption,” it added.

Crisil also noted that while domestic demand has stayed relatively resilient so far, it would be tested next year by weakening industrial activity. Increasing transmission of interest rate hikes to consumers will also be a pressure point, it further said, adding that rural income prospects remain dependent on the vagaries of the weather. “While lowering demand for Mahatma Gandhi National Rural Employment Guarantee Act jobs is an encouraging sign for the rural economy from a job perspective, depressed wages are a matter of concern for rural demand,” it said.

Private final consumption expenditure was a positive contributor to second quarter GDP growth and increased 9.7% in the quarter compared with 25.9% in the previous quarter.

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First published on: 02-12-2022 at 03:15 IST