Dean Baker on the Jobs Report:
Economy Adds 288,000 Jobs in April, Sharp Drop in Labor Force Leads to Plunge in Unemployment: The economy added 288,000 jobs in April. With upward revisions to the prior two months’ data, this brings the three month average to 234,000. This is highest three month total since the economy added 829,000 jobs in the first three months of 2012. The household survey showed unemployment rate falling from 6.7 percent in March to 6.3 percent in April, but the drop was entirely the result of 806,000 people leaving the labor force. Employment, as measured in the household survey, actually fell by 73,000. The employment-to-population ratio (EPOP) remained unchanged at 58.9 percent. ...
On the whole, this is a very positive report. While the April job growth was likely inflated as a result of bad weather in prior months, the three month average is still near the peaks for the recovery.
Update: Jared Bernstein:
the decline in unemployment is entirely due not to job creation, but to labor force decline (employment actually fell slightly in the household survey). This important and closely watched indicator—the labor force participation rate—also fell 0.4 tenths, reversing recent gains and returning the lfpr to its low where it stood at the end of last year, commensurate with levels we haven’t seen since the late 1970s. Though part of the recent decline in the participation rate reflects our aging demographics, more than half in my judgment is due to weak demand.
The BLS noted that the large decline in the labor force—about -800,000—was likely due to fewer entrants as opposed to more leavers. And this is a volatile number, as I stress below. But neither can it be dismissed out of hand: it has been essentially stuck at historically low levels for a while now.
On the other hand, the payroll report shows pretty decent labor demand/job creation. As noted, the 288,000 jobs beat expectations, and gains for the prior two months were revised up by 36,000. Job gains occurred across most industries, with 67% of private industries expanding employment, the largest share in over two years (government employment was also up 15,000, almost all due to local government; federal employment was down slightly).