Festive Season Fails to Spur Jobs Market, Urban Unemployment Rises

October was an important month in the current fiscal year. Early economic indicators showed a pickup in demand—helped by the first full month of GST rate cuts and buoyed by festival-season sales. However, this momentum did not translate into any visible improvement in India’s headline unemployment numbers. According to the latest Periodic Labour Force Survey, or PLFS, monthly bulletin, the unemployment rate stood at 5.2% in October 2025, unchanged from the previous month.

In fact, overall urban unemployment inched up to 7%, from 6.8% in September, with a marginal easing in rural unemployment (4.4% versus 4.6%) helping to offset the rise. The improved figures for the rural areas could be due to improved monsoon rains this year

For women, the unemployment rate dipped slightly—from 5.5% to 5.4%—while the rate for men remained unchanged.

(Note: Unless otherwise mentioned, all numbers pertain to those aged 15 years+). 

The month brought mixed employment outcomes across demographic groups. The most notable improvement was among young women in rural areas, where the unemployment rate dropped nearly a full percentage point—from 14.1% in September to 13.2% in October. For young men, however, the trend moved in the opposite direction, with unemployment rising slightly from 13% to 13.2%. Rural women across age groups saw an easing in unemployment, but the situation worsened for women in urban areas. Among men, unemployment remained comparatively stable, with only marginal variations across age and location. 

  The GST rate cuts and festival demand did little to lift India’s labour force participation rate (LFPR). The LFPR inched up only marginally—from 55.3% in September to 55.4% in October—indicating that the month’s economic activity failed to draw a significantly larger share of people into the workforce. While rural India saw a modest improvement, with LFPR rising from 57.4% to 57.8%, the trend in urban areas moved in the opposite direction. Much of this divergence was driven by women: rural female LFPR rose by half a percentage point, but urban female LFPR fell sharply—from 26.1% to 25.4%—its lowest level so far this year. By contrast, men showed far less movement, with LFPR ticking up slightly in rural areas and remaining unchanged in urban centres. 

Together, the LFPR and unemployment numbers point to an improved labour market for women, especially, younger women living in rural areas. The picture, however, looks more sobering for their urban counterparts, and for young Indians in general, for whom unemployment remains stubbornly high. 

A note on the unemployment rate: how is it calculated and what do these figures mean?

These numbers are estimated through a large-scale national household survey - the Periodic Labour Force Survey (PLFS) -- conducted by the Ministry of Statistics and Programme Implementation (MoSPI). The October 2025 estimates are based on the survey of 3,74,164 individuals from 89,264 households. 

A person who is looking for work but is unable to find work is considered unemployed. They are different from those who are neither working nor looking for work (such individuals are considered to be out of the labour force). The PLFS considers a person as unemployed in a week if they did not work even for one hour on any day during the reference week but sought or were available for work at least for 1 hour on any day during the reference week. 

Unlike inflation for which India has a target “ideal” range, there is no ideal unemployment figure. In general, higher rates of unemployment are bad for the economy though some unemployment (called “natural unemployment”) is considered good, even necessary for a healthy, functional economy. Many estimates place this to be in the 3-5% range. While India’s overall unemployment rate is  not very high, unemployment remains particularly higher for specific groups -- in urban areas, for younger persons, and especially for women.