India’s unemployment rate drops to 4-year low before festival season

India’s unemployment rate dropped to the lowest in more than four years in September, buoyed by a strong rise in new jobs, according to a private research firm.

The jobless rate sharply fell to 6.43%, data from the Centre for Monitoring Indian Economy Pvt. showed. The reading is the lowest since August 2018 and compares with a one-year high of 8.3% in August.

The decline comes as nearly 10 million jobs got added during the month, defying the trend in August when workers who entered the job market couldn’t find work. In rural areas, the unemployment rate declined to 5.8% from 7.7% in August, while in urban areas it stood at 7.7%, lower than 9.6% in the previous month.

The latest data comes against the backdrop of India’s festive season which typically boosts economic activity and aids jobs growth. A strong demand in the services sector along with steady monsoon rains also likely boosted employment opportunities.

But risks loom large amid fears of a global recession that could moderate demand. The central bank last week lowered its growth forecast to 7% for the year ending March even as it delivered a fourth straight rate hike that lifted borrowing cost to 5.90% — the highest in more than three years — to rein in inflationary pressures.

India’s economic expansion has been at one of the fastest rates in the world, but not enough to create jobs. That has led to some discontent among the country’s youth while giving ammunition to opposition parties to ratchet up rhetoric against unemployment.