By Erika Mae P. Sinaking

The Philippine unemployment rate climbed to 5.4% in September, up from 3.8% a year earlier and 5.3% in August, as the surge of Filipinos entering the labor force outpaced job creation, according to the Philippine Statistics Authority (PSA).

The increase came even as employment expanded and underemployment eased. The number of unemployed Filipinos rose to 2.86 million from 1.96 million in September 2025 and 2.77 million the previous month.

The labor force grew to 53.19 million in September from 51.56 million a year earlier and 52.56 million a month earlier, lifting the labor force participation rate to 64.5% from 64% in August. The labor force consists of the employed plus the unemployed, so the higher participation rate signals that a larger share of working-age Filipinos is now part of the job market.

Despite the rise in joblessness, employment climbed to 50.32 million, up from 49.6 million a year earlier and 49.79 million in August. The employment rate stood at 94.6%, lower than the 96.2% recorded in September 2025 and slightly below the 94.7% posted in August.

The PSA data suggest employment continued to grow, but not fast enough to absorb the influx of new jobseekers entering the labor market.

“The most who entered the labor market year on year in terms of age were those aged 15 to 24… — 988,000,” National Statistician and Civil Registrar General Claire Dennis S. Mapa told a livestreamed news briefing on Friday. “The 35 to 44 age group is at 451,000, and 45 to 54 is at 433,000.”

“More men entered the labor market this September compared with the same period last year,” he added.

Underemployment Eases

Underemployment, which measures employed workers seeking additional hours of work or another job, improved during the month. The rate eased to 11% in September from 11.1% a year earlier and 11.9% in August, with about 5.56 million workers reporting that they wanted additional work or longer working hours.

Among underemployed workers, 61.4% worked fewer than 40 hours a week, while the remaining 38.6% worked 40 hours or more but still looked for additional employment or income opportunities, the PSA said.

Services Lead Employment, Construction Shrinks

The service sector remained the country’s biggest employer, accounting for 62.2% of total employment — meaning roughly three in five employed Filipinos work in service activities. Agriculture represented 20.7%, while industry accounted for 17.1%.

Wholesale and retail trade and the repair of motor vehicles and motorcycles remained the biggest source of jobs, employing 19.9% of workers. Agriculture and forestry followed at 17.9%, while construction accounted for 9.3%.

Year on year, accommodation and food service activities registered the largest employment gain, adding 834,000 jobs. Transportation and storage added 254,000, while agriculture and forestry, public administration and defense, and other service activities also posted increases.

Construction recorded the largest employment decline, shedding 271,000 jobs. Arts, entertainment and recreation lost 163,000, while information and communication, wholesale and retail trade, and professional, scientific and technical activities also posted decreases.

“Construction activities really went down, particularly public construction,” Mr. Mapa said. “So this is where the decline in our employed persons comes from, particularly in the construction of buildings, where we had a decline of about 329,000.”

He said government construction slowed while the cost of building materials increased, particularly for home repairs and maintenance.

“This rose at a rate of about 5.5%,” Mr. Mapa said. “Material costs went up, public construction activities went down, and this contributed to the reduction in our employed persons in the construction industry.”

On a month-on-month basis, wholesale and retail trade led job creation with an increase of 546,000 positions, followed by accommodation and food service activities, public administration and defense, manufacturing, and fishing and aquaculture.

Employment Composition and Youth Participation

Wage and salary workers accounted for 63% of total employment, while self-employed workers without paid employees made up 28.1%. Unpaid family workers represented 7.3% of employed persons.

Youth participation in the labor market also increased. The labor force participation rate among Filipinos aged 15 to 24 rose to 34.1% from 31.6% a year earlier, while youth employment reached 6.23 million. About 715,000 young workers were underemployed, translating to an underemployment rate of 11.5%.

The PSA publishes its labor force data monthly, and the next round, covering October, will give a further reading on whether labor force participation stays elevated, whether the construction slowdown persists, and whether the easing in underemployment continues.

— with Norman P. Aquino