India’s unemployment rate fell to 5.0% in August 2026 from 5.1% in July, coming in below the 5.2% market expectation and marking the lowest level since February. The decline was driven by rural areas, where unemployment dropped to 4.1% from 4.5%, the lowest level since December, while urban unemployment edged up to 6.8% from 6.7%. The improvement coincided with stronger labor-market participation, with the labor force participation rate rising to 55.6% from 55.4%, while the worker population ratio increased to 52.8% from 52.5%, its highest level since March. The rise in the employment ratio alongside higher labor-force participation points to stronger employment activity behind the decline in unemployment. Female labor-force participation also increased to 34.8% from 34.4%, led by rural participation, which rose to 39.4% from 38.8%.