Breakout

Jobless rate hits 5-½ year low, here’s why no one’s happy

Jeff Macke
Breakout

According to the Bureau of Labor Statistics the U.S. economy added 288,000 jobs in April, driving the unemployment rate down to 6.3%. Analysts had been expecting 218,000 jobs and 6.6% unemployment.

Below the headline both average wages earned and work-week duration were unchanged, but the participation rate fell to 62.8%. It’s the lowest participation since 1978, highlighting concerns that the economic recovery is largely a statistical game of smoke and mirrors. Participation is a widely watched number though it’s hard to say exactly what it’s supposed to be given the skewing impact of retiring baby boomers.

“Like all these reports there’s something here for everyone,” says Zach Karabell of Envestnet. “800,000 people evaporated from the labor force. You have continual participation going down and a lot of these jobs are ill-paid and tough to live on. I do hope that in some sense the conversation shifts from jobs to what are the quality of these jobs and what kind of wages (are being earned).”

The jobs report marked the end of the data deluge that also saw a Fed meeting, GDP for the first quarter, and ISM manufacturing data. Only the GDP data could be counted as a surprise to the downside but it was quickly dismissed as yet another weather problem. The stock market more or less shrugged it all off regardless, rising nearly 1% through early trading on Friday.

Related: Huge GDP miss complicates Yellen's taper decision

Those looking for a Great Big Takeaway from the NFP data or anything we’ve heard this week are likely to be disappointed. This is an economy for grinders, those looking for surprises need to hunt elsewhere.

“This economy has not been in the dumps since 2009 and it hasn’t been soaring the way people would fantastically expect,” shrugs Karabell. “We are in the world we’re in which is a lot of people have low quality jobs, a lot of people are starting businesses and a lot of people are doing well.”

Whether or not that feels great is a matter to take up with your therapist rather than your broker.

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