India’s unemployment rate declined to 5.0% in August, reaching its lowest level in six months. According to official data from the country’s National Statistical Office, the figure improved from July’s 5.1% and came in notably better than market expectations—surveyed analysts had forecast unemployment to inch up to 5.2%. A stronger labor market reading was last recorded in February, when the jobless rate stood at 4.9%.

The main driver of the broad-based recovery was the agricultural sector: rural unemployment dropped from 4.5% in July to 4.1% in August, marking the lowest level since January this year. Urban conditions were less clear-cut—urban unemployment edged up slightly to 6.8% from 6.7% a month earlier. Positive dynamics were observed across all demographic groups: the share of unemployed men fell from 5.0% to 4.9%, while the decline among women was more pronounced, from 5.4% to 5.1%.

At the same time, official statistics recorded an increase in overall labor force participation. The labor force participation rate for people aged 15 and over grew to 55.6% from 55.4% in July, and the employment-to-population ratio increased from 52.5% to 52.8%. A notable contribution to the employment expansion came from rising female labor participation, which climbed from 34.4% to 34.8% from a month ago.