November Unemployment Rate Shoots to 3-Month High of 8%

The unemployment rate spiked to 8% in November from 7.77% in October and 6.43% in September, its highest level since August, when it shot up to 8.28%. The unemployment rate, as per the 30-day moving average, had been moving up since the middle of November.

According to Centre for Monitoring Indian Economy (CMIE) data released on Thursday, the rate of joblessness in urban areas was higher at 8.96% compared to 7.55% in rural India. The unemployment rate in urban India in October was 7.21% compared to 8.04% in rural areas, PTI reported.

Haryana continued to have the highest unemployment rate among states at 30.6%, followed by Rajasthan at 24.5%, Jammu and Kashmir at 23.9%, Bihar at 17.3% and Tripura at 14.5%.

Among states with the least unemployment rate, Chhattisgarh was at the top with 0.1%, Uttarakhand at 1.2%, Odisha at 1.6%, Karnataka at 1.8% and Meghalaya at 2.1%.

Meanwhile, retail inflation for industrial workers, according to the Labour Bureau, was above 6% in October although it eased marginally from September, The Financial Express reported. Consumer price inflation for industrial workers in October was 6.08% compared to 6.49% in September and 4.52% during the corresponding month a year ago.

Food inflation remained high at 6.52% in October although it was marginally lower from 7.76% in September. Food inflation was at 2.2%. Retail inflation for industrial workers has been high since August after rising to 6.16% in June.

According to analysts, lower formal sector employment and subdued rural wages could prove to be a dampener on consumption. “Improving contact-intensive services amid stable urban consumption demand could continue at a slower pace for some more time,” a report by Emkay Global Financial on the Q2 GDP data stated.

“Formal sector employment growth seems to be reducing, indicated by the sequential fall in new EPFO payrolls and the Naukri Job index. Additionally, subdued real rural wage growth may further impact rural consumption,” it added.

Crisil too noted that while domestic demand has been relatively resilient so far, it would be tested next year by the weakening industrial activity. Increasing transmission of interest rate hikes to consumers will also be a pressure point and rural income prospects remain dependent on the vagaries of the weather, Crisil added.

“While lowering demand for Mahatma Gandhi National Rural Employment Guarantee Act jobs is an encouraging sign for the rural economy from a job perspective, depressed wages are a matter of concern for rural demand.”