The Philippines’ unemployment rate for December 2025 was released on January 7, 2026, registering at 4.40%. This figure represents a notable decline from November’s 5.00% and beats market expectations of 5.00%, according to the Sigmanomics database. The rate is also lower than the 12-month average of approximately 4.50%, reflecting a positive trend in the labor market after a turbulent period marked by a spike to 5.30% in September 2025.

Drivers this month

• Seasonal hiring in retail and services ahead of the holiday season.
• Government infrastructure projects boosting construction employment.
• Resilience in the manufacturing sector despite global supply chain pressures.

Policy pulse

The unemployment rate remains within the central bank’s comfort zone, supporting the Bangko Sentral ng Pilipinas’ (BSP) current stance of gradual monetary tightening to balance inflation control with growth preservation.

Market lens

Following the release, the Philippine peso (PHP) strengthened modestly against the USD, while local equities showed mild gains, reflecting investor confidence in improving domestic economic fundamentals.

December’s unemployment rate of 4.40% compares favorably to October’s 3.90% and November’s 5.00%, indicating a rebound after the sharp rise in September 2025. The rate remains slightly above the pre-spike levels seen in mid-2025, where unemployment hovered around 3.70% to 3.90%. Year-over-year, December 2025’s figure is higher than December 2024’s 3.80%, reflecting lingering labor market adjustments amid global economic uncertainties.

GDP and inflation context

GDP growth for Q4 2025 is estimated at 6.10%, supported by domestic consumption and government spending. Inflation remains elevated at 5.20% year-on-year, pressuring real wages and consumer purchasing power. These macro indicators frame the labor market dynamics, where job creation is steady but wage growth is constrained.

Monetary policy & financial conditions

The BSP has maintained policy rates at 4.50% since November 2025, signaling a cautious approach amid inflation risks. Financial conditions remain broadly accommodative, with stable credit growth and manageable bond yields. The unemployment improvement supports the BSP’s view that tightening has not yet derailed labor market recovery.

Fiscal policy & government budget

Fiscal stimulus through infrastructure and social programs continues to underpin employment gains. The government’s 2026 budget allocates PHP 5.20 trillion, focusing on job creation and poverty reduction. However, rising debt servicing costs and external shocks pose risks to fiscal space.

Market lens

Immediate reaction: The PHP/USD exchange rate appreciated by 0.30% within the first hour post-release, while the PSEi index gained 0.50%, reflecting positive sentiment on labor market recovery.

Looking ahead, the Philippines’ unemployment rate trajectory depends on several factors. The baseline scenario projects a gradual decline to 4.20% by mid-2026, supported by ongoing infrastructure projects and stable monetary policy. However, risks remain.

Bullish scenario (30% probability)

• Global inflation eases faster than expected, boosting consumer demand.
• Geopolitical tensions subside, improving export prospects.
• Accelerated digital economy growth creates new job opportunities.

Base scenario (50% probability)

• Moderate inflation persists, limiting wage growth.
• Fiscal stimulus continues but constrained by debt concerns.
• Labor market improves steadily but remains vulnerable to external shocks.

Bearish scenario (20% probability)

• Global recession risks materialize, reducing demand for exports.
• Inflation spikes again, eroding real incomes and employment.
• Fiscal tightening slows government spending, dampening job creation.

Overall, the unemployment rate’s decline in December 2025 is encouraging but requires cautious monitoring amid evolving macroeconomic and geopolitical risks.

The December 2025 unemployment rate of 4.40% in the Philippines signals a positive turn in labor market conditions after a volatile second half of 2025. Supported by steady GDP growth, accommodative fiscal policy, and stable monetary conditions, the labor market appears resilient. However, inflationary pressures and external geopolitical risks remain key challenges. Policymakers must balance inflation control with growth support to sustain employment gains. Investors and market participants should watch upcoming inflation data, fiscal developments, and global risk sentiment for clues on the labor market’s path in 2026.

Key Markets Likely to React to Unemployment Rate

The Philippines’ unemployment rate is a critical indicator for multiple asset classes. Local equities and the Philippine peso often respond swiftly to labor market data, reflecting economic health and policy expectations. Additionally, regional currency pairs and emerging market stocks linked to the Philippines’ trade and investment flows show sensitivity to employment trends.

• PSEI – The Philippine Stock Exchange Index typically moves in tandem with labor market strength, as employment growth supports consumption and corporate earnings.
• USDPHP – The peso’s exchange rate versus the US dollar reacts to unemployment data, influencing capital flows and monetary policy expectations.
• SGDPHP – The Singapore dollar to Philippine peso pair reflects regional trade and investment sentiment linked to labor market conditions.
• BTCUSD – Bitcoin’s price can be indirectly influenced by macroeconomic stability and risk appetite, which are affected by employment data.
• SM – SM Investments Corporation, a major Philippine conglomerate, is sensitive to consumer spending trends driven by employment levels.

FAQs

What does the December 2025 unemployment rate indicate for the Philippine economy?

The 4.40% rate suggests improving labor market conditions, supporting economic growth and consumer spending.

How does the unemployment rate affect monetary policy in the Philippines?

Lower unemployment supports the BSP’s cautious tightening stance, balancing inflation control with growth preservation.

What are the main risks to the Philippines’ employment outlook in 2026?

Key risks include global inflation spikes, geopolitical tensions, and fiscal constraints that could slow job creation.

Takeaway: The Philippines’ December 2025 unemployment rate decline to 4.40% signals a resilient labor market, but vigilance is needed amid inflation and external risks.