India’s labour force participation rate (LFPR), which measures the percentage of the population looking for employment, showed a slight improvement in August, as it increased to 55.6% from 55.4% in July. The country’s unemployment rate also eased slightly, led by a moderation in the rural unemployment rate.
Domestic workforce participation rate, which measures the percentage of the employed population, also improved to 52.8% in August from 52.5% in July. The uptick was led by increased workforce participation in rural areas.
However, participation rate and unemployment rates in urban areas remain broadly unchanged, government data showed.
Healthy improvement in rural labour market
Healthy growth was witnessed in the LFPR in rural areas, which climbed to 58.2% in August against 58% reported in July. On a year-on-year basis, the participation rate in rural areas increased by 1.2 percentage points from August 2025.
However, in urban areas the participation rate in August was the same as that reported in July at 50.4%. On a YoY basis, LFPR registered a growth of 0.6 percentage points rising to 55.6% from 55% reported last year in August.
Participation of women rises, led by growth in rural participation
The female LFPR also witnessed a slight improvement, led by an increase in the participation rate in rural areas. Overall female labour force participation rate for August stood at 34.8%, up from 34.4% reported in the previous month.
In August, female rural LFPR climbed to 39.4% from 38.8% reported in July, while in urban areas the rate was fairly stable at 25.4% as compared to 25.3% reported in the previous month.
On a yearly basis, this rate increased by 1.1 percentage points to 34.8% from 33.7% reported in the same month last year.
Workforce participation rate reaches highest level in five months.
The overall workforce participation rate (WPR) increased to 52.8% in August, reaching its highest level since March 2026 as compared to 52.5% in July. The rise in WPR was led by high rural participation.
Rural WPR climbed to 55.8% in August, up from 55.4% reported in July, while urban WPR remained unchanged at 47%. On a YoY basis, WPR increased to 52.8% from 52.2% reported in the corresponding month last year.
Unemployment rate registers marginal decline
The unemployment rate for the population aged 15 and above eased slightly to 5% in August from 5.1% reported in July. Rural unemployment decreased to 4.1% in August, reaching its lowest level since January. Last month, this rate was reported at 4.5%
However, the urban unemployment rate was largely unchanged at 6.8% against 6.7% reported in the previous month.
Compared with the same period last year, the overall unemployment rate was broadly stable, MoSPI said in its press release. It added that the unemployment rate for both males and females remained broadly unchanged as compared to last year.