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Philippine unemployment falls to 5.3% in August, still above a year earlier

Published Data as of PhilippinesMacro & households
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Key points

Implications for lenders

Lenders should not loosen underwriting on the August fall alone, as unemployment at 5.3% is still above a year earlier and hours worked fell to 39.2 hours. Collections teams may see more partial payments from borrowers whose hours were cut, so early-stage restructuring options can help limit roll-rates.

Implications

ExecutivesOne better month does not end labour-market stress; keep tighter limits for new-to-credit and informal-income borrowers until the year-on-year gap narrows.
InvestorsUnderemployment above a year earlier and fewer hours, alongside high inflation, point to pressure on consumer lenders' asset quality later in 2026.
OperatorsWatch income stability rather than employment status alone; fewer hours can cut repayment capacity even when a borrower stays employed.

Facts

Labour market: the PSA's August 2026 Labor Force Survey put the unemployment rate at 5.3% (down from 6.0% in July 2026; up from 3.9% in August 2025). 1 The number of unemployed persons was 2.77 million (down from 3.14 million in July 2026; up from 2.03 million in August 2025). 2 Employed persons rose to 49.79 million (up from 49.21 million in July 2026). 3 The labour force participation rate was 64.0% (up from 63.6% in July 2026; down from 65.1% in August 2025). 4

Quality of work: the underemployment rate was 11.9% (down from 12.9% in July 2026; up from 10.7% in August 2025), 5 or 5.90 million people (down from about 6.33 million in July 2026). 6 Average weekly hours worked fell to 39.2 hours, the first reading below 40 hours since May 2025, which reports linked to weather disruptions. 7 The average unemployment rate for January to August was 5.6%. 8

Context: the PSA attributed part of the monthly fall to fewer new entrants to the labour force than in July, when many graduates joined.

Analysis

Time series: August reverses part of July's jump, when unemployment reached 6.0% 9, but the rate is still well above the year-earlier level, and the drop in hours worked suggests weaker earnings for those in work. Combined with inflation of 7.2% in September, 10 real household income is under pressure from both jobs and prices.

Credit link: consumer loan growth slowed to 16.2% in August 11 and banks' consumer-loan NPL ratio was 5.49% in July. 12 A softer labour market usually shows up in consumer arrears with a lag of a few months, so the August improvement does not yet change the credit picture.

Cross-country: Malaysia's unemployment rate was 3.0% in July. 13 Definitions are similar (ILO-based labour force surveys), but the Philippine rate is both higher and more volatile from month to month, which makes income-based underwriting harder to calibrate.

Counterpoints and uncertainties

Monthly Labor Force Survey figures move sharply with school-leaving and weather, so one month can overstate a trend. Unemployment is still above the year-earlier rate, and the PSA release shows agriculture and forestry leading the monthly job gains, a sector exposed to weather and seasonal swings. Government catch-up spending on infrastructure could support jobs in the fourth quarter, while higher commodity prices could push more workers into underemployment.

Key figures

  1. Unemployment rate (PSA): 5.3% (down from 6.0% in July 2026; up from 3.9% in August 2025). Unemployed persons as % of the labour force, Labor Force Survey. Philippines, persons aged 15 and over. Basis date: 31 Aug 2026. Source: PSA: Labor Force Survey — Unemployment rate declined to 5.3 percent in August 2026 (2026-10-07)
  2. Unemployed persons: 2.77 million (down from 3.14 million in July 2026; up from 2.03 million in August 2025). Number of unemployed persons, Labor Force Survey. Philippines. Basis date: 31 Aug 2026. Source: PSA: Labor Force Survey — Unemployment rate declined to 5.3 percent in August 2026 (2026-10-07)
  3. Employed persons: 49.79 million (up from 49.21 million in July 2026). Number of employed persons, Labor Force Survey. Philippines. Basis date: 31 Aug 2026. Source: PSA: Labor Force Survey — Unemployment rate declined to 5.3 percent in August 2026 (2026-10-07)
  4. Labour force participation rate: 64.0% (up from 63.6% in July 2026; down from 65.1% in August 2025). Labour force as % of population aged 15 and over. Philippines. Basis date: 31 Aug 2026. Source: PSA: Labor Force Survey — Unemployment rate declined to 5.3 percent in August 2026 (2026-10-07)
  5. Underemployment rate: 11.9% (down from 12.9% in July 2026; up from 10.7% in August 2025). Underemployed persons (wanting more hours or work) as % of employed persons. Philippines. Basis date: 31 Aug 2026. Source: PSA: Labor Force Survey — Unemployment rate declined to 5.3 percent in August 2026 (2026-10-07)
  6. Underemployed persons: 5.90 million (down from about 6.33 million in July 2026). Number of underemployed persons, Labor Force Survey. Philippines. Basis date: 31 Aug 2026. Source: PSA: Labor Force Survey — Unemployment rate declined to 5.3 percent in August 2026 (2026-10-07)
  7. Average weekly hours worked: 39.2 hours (first reading below 40 hours since May 2025). Average hours worked per week by employed persons, Labor Force Survey (as reported). Philippines. Basis date: 31 Aug 2026. Source: Inquirer: PH jobless rate dropped to 5.3% in August — PSA (2026-10-07)
  8. Average unemployment rate, January–August 2026: 5.6%. Average of monthly unemployment rates, January to August 2026 (as reported). Philippines. Basis date: 31 Aug 2026. Source: Inquirer: PH jobless rate dropped to 5.3% in August — PSA (2026-10-07)
  9. Unemployment rate (PSA): 6.0% (up from 5.3% in July 2025)
    Labor Force Survey.
    . Unemployed persons as a share of the labour force. Philippines, national. Basis date: 31 Jul 2026. Source: PSA: Number of Employed Persons Rose to 49.21 Million as Underemployment Declined in July 2026
  10. Headline CPI inflation (PSA): 7.2% (up from 6.1% in August; matches April 2026). Year-on-year change in the consumer price index. Philippines, national. Basis date: 30 Sep 2026. Source: Inquirer: PH inflation climbs to 7.2% in September (2026-10-06)
  11. Consumer loan growth: 16.2% (down from 17.1% in July). Year-on-year growth of outstanding consumer loans to residents. Universal and commercial banks. Basis date: 31 Aug 2026. Source: Philstar: Bank lending growth reaches 3-month high (2026-10-02)
  12. Consumer loan NPL ratio: 5.49% (up from 5.44% in June). Non-performing consumer loans as a share of consumer loans (BSP data). Philippine banking system. Basis date: 31 Jul 2026. Source: Inquirer: Bad loans up amid continuing consumer strain (2026-09-09)
  13. Unemployment rate (DOSM): 3.0% (unchanged from June). Unemployed persons as a share of the labour force. Malaysia, Labour Force Survey (DOSM). Basis date: 31 Jul 2026. Source: BERNAMA: Unemployment Rate Unchanged At 3.0 Pct In July - DOSM

Sources

  1. PSA: Labor Force Survey — Unemployment rate declined to 5.3 percent in August 2026 (2026-10-07)primary
  2. Inquirer: PH jobless rate dropped to 5.3% in August — PSA (2026-10-07)
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A Japanese version of this article is available: 日本語版

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