Key Highlights

• Unemployment rate eased to 5.2% in July–September 2025 (vs 5.4% in April–June).

• Hiring momentum strengthened in services, construction, and manufacturing.

• Labour-force participation and formal job creation continued to rise.

• Urban demand stayed firm, while rural employment gained from infrastructure and housing programs.

• Government spending and digital initiatives are driving job formalization and skilling.
  

Employment Trends Strengthen

India’s labour market continued to demonstrate resilience in the July–September 2025 quarter. The unemployment rate declined to 5.2%, down from 5.4% in the previous quarter, according to the Periodic Labour Force Survey (PLFS).

This improvement reflects a broad-based recovery in hiring, especially across key sectors such as :

• Services — including retail, logistics, and hospitality

• Construction and infrastructure

• Manufacturing and allied industries

Government-led capital expenditure, housing initiatives, and digital skilling programs have strengthened employment opportunities in both urban and semi-urban regions. Rural areas also saw improved job demand, supported by infrastructure development and affordable housing rollout.

What’s Driving the Momentum?

1. Services Sector Strength : Growth in retail, transportation, hospitality, and IT-enabled services continues to support white- and blue-collar employment.

2. Infrastructure Push : India’s ongoing capital expenditure cycle is fueling job creation in construction and semi-skilled roles.

3. Manufacturing Recovery : Improved domestic demand and a focus on local supply chains have boosted hiring in industrial clusters.

4. Skilling and Formalization : Rising EPFO enrollments, digital payroll adoption, and MSME credit programs are helping more workers move into the formal sector.

Labour Market Structure Shifts

The structure of India’s workforce is gradually transforming. Labour-force participation is climbing as formal job creation expands through:

• Greater EPFO and ESIC enrollments

• Digitization of payroll systems

• Wider MSME access to credit and compliance

While urban labour markets continue to be the main growth engine, rural employment remains supported by public investment in roads, logistics, and housing infrastructure.

Final Word

The easing unemployment rate underscores India’s economic resilience and the effectiveness of public-investment-led job creation. Stable consumption trends, formal workforce absorption, and steady hiring in key sectors suggest that labour-market conditions remain well-supported going into the next quarter.

However, global macroeconomic uncertainty and rural demand sensitivity—particularly linked to monsoon performance—will remain key factors to monitor in the coming months.