India's trade deficit narrows to $26.86 bn in August from $27.2 bn a year earlier

India's unemployment rate decreased to 5% in August, down from 5.1% in the previous month, according to government figures published on Tuesday. This modest improvement was better than the 5.2% rate forecast by economists in a Reuters poll.

The decline was largely attributed to a drop in rural unemployment, which fell to 4.1% from 4.5% in July. Meanwhile, urban unemployment remained largely stable at 6.8%, unchanged from 6.7% in the prior month.

On a year-over-year basis, both the overall and urban unemployment rates remained essentially unchanged in August. However, the rural unemployment rate did see a slight drop to 4.1% from 4.3% in August 2025, marking a 0.2 percentage point decline.

A key factor behind the improvement was a rise in female labor force participation. This increase was primarily driven by a surge in rural participation, while urban participation remained largely stable. Over the past year, the overall female labor force participation rate (LFPR) has improved, with rural areas contributing to the majority of the gains.

The overall labor force participation rate for people aged 15 and above edged up marginally to 55.6% in August from 55.4% in July. Similarly, the rural LFPR rose to 58.2% from 58%, while the urban LFPR remained steady at 50.4% between the two months.

When compared to August 2025, the overall LFPR increased by 0.6 percentage points to 55.6%, up from 55%. Rural LFPR also saw a 1.2 percentage point rise to 58.2%, from 57%, while urban LFPR dropped slightly by 0.5 percentage points to 50.4%, down from 50.9%.