India's Unemployment Rate Surges to 5.5%, an 11-Month High

India's unemployment rate hit 5.5% in May, an 11-month high, according to the National Statistics Office's Periodic Labour Force Survey released Monday. The labour-force participation rate dropped to 54.4% that month, also an 11-month low, from 55% in April. The worker population ratio, the share of employed persons in the population, fell to 51.4% from 52.2%.

The NSO said the softening reflects a seasonal moderation in economic activity during May. The rural labour-force participation rate slipped to 56.6% from 57.5%, while the urban rate edged down to 49.8% from 50.1%. The rural unemployment rate rose to 5.1% from 4.6%, and the urban rate climbed to 6.4% from 6.6%.

Male unemployment increased to 5.4% in May from 5.1% in April. Female unemployment rose to 5.6% from 5.4%. The female worker population ratio dropped to 31% from 32.1%, while the male ratio slipped to 72.5% from 73.2%.

For markets, the data points to weaker consumer demand. Consumption-driven sectors, such as autos and consumer durables, may face earnings pressure if the trend persists. Bond yields fell 3 basis points after the release, traders said, as bets on a rate cut firmed. The RBI has held its key rate at 6.5% since February 2023.

The next PLFS monthly bulletin is due in July.