India’s unemployment rate fell sharply in September to 6.86% as against 8.32% in August as 8.5 million additional jobs were created last month with the majority of them created in rural India with construction activity picking up pace, the Centre for Monitoring Indian Economy said.

As per the CMIE, the creation of additional jobs pushed up India’s employment rate to 37.87% in September as compared to 37.15% in August. Further, the employment rate in rural India jumped by 0.85 percentage points to 39.53% in September as against 38.68% in August while that in urban India grew to 34.62% compared with 34.15% in August.

Even the unemployment rate in rural India was lower at 6.1% in September compared to 8.6% in urban India.

“Of the 8.5 million additional people employed in September, 6.5 million or 76.5% of the total employment generation was in rural India,” CMIE said in its weekly labour market analysis.

“This is an extraordinary increase in rural India when the demand for labour from agriculture is usually low. While agriculture absorbed an additional 0.55 million during the month, the remaining six million were absorbed in non-farm rural jobs, largely construction and manufacturing,” it added.

According to CMIE, the construction industry in rural India was the largest absorber of additional labour in September with 7.55 million additional people getting employed in the sector during the month on the back of steady growth in investments in road building and possible increase in employment under the rural employment guarantee scheme the Mahatma Gandhi National Rural Employment Guarantee Act.

Further, rural India also saw an increase of 4.7 million in employment in manufacturing industries in September. Of this, employment in food industries increased by 2.16 million while metal industries saw an increase of 1.5 million jobs and textiles added 0.2 million new jobs, it said.

However, the services sector in rural areas shed a substantial 6.8 million jobs, including retail trade, personal non-professional services, travel and tourism and education.

As per CMIE, the addition of 6.5 million jobs in rural India last month brought down the number of unemployed in rural India by 4.6 million to 18.1 million in September compared to 22.7 million earlier. “Most of the new jobs created in rural India were of daily wage labourers,” it added.