Its not all sunshine and roses currently....
A drop in the unemployment rate helped provide some upside to what was an otherwise downbeat jobs report — but it was for all the wrong reasons.
www.cnbc.com
Job seekers giving up: Labor force participation rate falls to lowest in 50 years, outside of Covid era
- June’s drop in the unemployment rate was because of an exodus of workers from the labor force.
- The labor force participation rate, which measures the working-age population of those either employed or looking for a job, fell to 61.5%, the lowest since March 2021, according to the Bureau of Labor Statistics.
- Excluding the Covid-era jobs market, it was the lowest participation rate since June 1976.
- The labor force plummeted by 720,000 in June
On a year-over-year basis, the labor force is down by just over 1 million, while the level of the employed also has fallen by 1.06 million and the ranks of the unemployed have risen by 40,000. The employment-to-population ratio slipped to 59% in June, the lowest since October 2021. All that has happened while the unemployment rate has risen by just one-tenth of a percentage point to 4.2%.
“What really affects me is not so much the unemployment rate,” said Dan North, senior economist for North America at Allianz. “What’s an important development is the participation rate, and this is a big leg down in one month, and over the past year it’s a pretty big leg down. I think this is a more important number.”
“I hate to use the word ‘alarming,’” he added, but said the numbers are cause for concern.
To be sure, some economists said the June numbers seem out of sort. Specifically, they cited the large decline in leisure and hospitality workers as a sign that the data could be noisy.
But the participation numbers are part of a continuing trend.
“It was shocking to see 720,000 people stop looking for work entirely and the hospitality sector shed jobs,” wrote Heather Long, chief economist at Navy Federal Credit Union. “It’s a better job market than a year ago, but opportunities are limited.”