Unemployment rate hits 5.3% in August

The Philippines’ unemployment rate rose to 5.3% in August from 3.9% a year earlier, leaving 2.77 million Filipinos without jobs as the labor market struggled to absorb a growing working-age population, the Philippine Statistics Authority (PSA) said on Wednesday.

Preliminary data on the August 2026 Labor Force Survey showed the number of unemployed Filipinos increased by about 740,000 from 2.03 million in August 2025, while the number of employed people fell to 49.79 million in August from 50.1 million a year ago.

The August jobless rate, however, eased from a four-year high of 6% in July, when 3.14 million Filipinos were unemployed. The number of employed individuals increased from 49.21 million in July.

National Statistician and Civil Registrar General Claire Dennis S. Mapa attributed the year-on-year rise in unemployment to the labor market’s inability to fully absorb people who entered the workforce.

At a briefing, Mr. Mapa said 897,000 people entered the labor force in August, but only 470,000 found jobs, leaving 427,000 unemployed.

For the first eight months, the average unemployment rate climbed to 5.2% from 4.11% during the same period a year ago.

Mr. Mapa said global headwinds also weighed on manufacturing industries, particularly garments, consumer electronics and electronic cables.

The labor force participation rate fell to 64% in August from 65.1% a year earlier, translating to 52.56 million Filipinos aged 15 and older in the labor force. That compared with 52.13 million a year earlier.

The participation rate improved from 63.6% in July, when the labor force stood at 52.36 million.

At the same time, the underemployment rate inched up to 11.9% in August from 10.7% a year ago but eased from 12.9% in July.  This meant 5.9 million employed Filipinos wanted additional working hours, another job or a job with longer hours.

This was the lowest underemployment rate since February’s 11.8%.

For the eight-month period, the underemployment rate averaged 12.7%

PSA data showed average working hours slipped to 39.2 hours in August from 41 a year ago and 40.6 in July, which Mr. Mapa described as “unusually low.” This was the first time average working hours fell below 40 since May 2025.

“The major reason really was the bad weather,” Mr. Mapa said, adding that workers had noted that heavy rains and floods disrupted business operations during the month.

Services remained the country’s biggest source of employment, accounting for 61.7% of employed Filipinos. Agriculture accounted for 20.9%, while industry made up 17.3%.

Wholesale and retail trade and motor vehicle repair had the biggest share of employment at 19%, followed by agriculture and forestry at 18.6% and construction at 10.3%.

Agriculture 

Agriculture and forestry posted the biggest year-on-year increase in employment, adding 532,000 workers in August.

Chinabank Research said job gains in agriculture were driven partly by higher employment in growing paddy rice, sugarcane, and coconuts.

“On a month-on-month basis, the sector also recorded the largest increase in employment, adding about 847,000 amid the start of the planting season,” it added.

The education sector added 298,000 jobs in August, while accommodation and food services gained 195,000, transportation and storage added 185,000, and human health and social work gained 142,000.

On the other hand, manufacturing saw the steepest annual decline, shedding 350,000 jobs in August.

Mr. Mapa said this was the third straight month of decline in manufacturing jobs. He noted that jobs in the electronics sector were affected by a challenging global market.

Benjamin B. Velasco, an assistant professor at the University of the Philippines Diliman School of Labor and Industrial Relations, said a decline in manufacturing jobs mean “extreme challenges not just in quantity but also quality of jobs.”

“Production has definitely been dampened as manufacturing usually picks up in the run-up to the end of the year. However, it has taken a massive hit from economic headwinds,” Mr. Velasco told BusinessWorld via a Facebook Messenger chat.

Fishing and aquaculture also lost 335,000 workers in August, while wholesale and retail trade and motor vehicle repair shed 269,000.

The labor market was also weaker for young Filipinos. The labor force participation rate among those aged 15 to 24 fell to 32.7% in August from 33.3% a year earlier.

The youth employment rate dropped to 84.3% from 88.3% in August 2025, although it improved from 81.4% in July. About 587,000 of the 5.95 million employed young Filipinos were underemployed.

Mr. Velasco said new graduates are typically more vulnerable to unemployment, especially as the economic slowdown has weakened the labor market.

“It will take some time for new entrants to get jobs,” he said.

Outlook

Meanwhile, Chinabank Research said seasonal demand could support job creation in the manufacturing and retail sectors in the coming months.

PSA’s Mr. Mapa said retailers typically hire additional workers as the Christmas season approaches.

“Businesses extend their operating hours and hire additional workers on a seasonal basis,” he added.

However, Chinabank Research warned that the agriculture sector could face more job losses amid a “very strong” El Niño in the next few months.

“Past El Niño events have resulted in significant job losses in the sector. For example, during the ‘strong’ 2024 El Niño episode, agriculture shed an average of 1.13 million jobs,” it said.

Mr. Mapa said past El Niño episodes saw agricultural workers shift to jobs in other sectors.

“What we saw in the field during that time was that they were moving into construction,” he said.

Chinabank Research said the weak labor market conditions may provide an early indication of still muted gross domestic product growth during the third quarter.

“From July to August, the unemployment rate averaged 5.6%. Additionally, shorter working hours likely reduced workers’ incomes, particularly among ‘no-work, no-pay’ workers which likely weighed on household spending,” it said.

With several regions reviewing wage hike petitions, Chinabank Research said there should be a balance between helping workers cope with rising costs and limiting the impact on businesses.

“While higher wages can support household purchasing power, larger increases could also raise labor costs and prompt businesses to adjust employment or hours worked, potentially limiting the overall boost to workers’ income,” it said. — Erika Mae P. Sinaking with Norman P. Aquino