Friday, March 04, 2011

Employment Report: Watch Participation Rate

Today's Bureau of Labor Statistics release of the employment situation report saw the unemployment rate decline to 8.9%. This rate was better than the consensus expectation of 9.1%. Today's stock market reaction to this supposedly improved report was less than positive. Aside from the heightened focus on oil prices, the report was not as positive as it may have seemed on the surface.

One factor in the report worth watching is the participation rate. As the below chart shows, the participation rate has been on a steady decline since the end of the recession in early 2009. This rate has fallen to 63.9% and is below the 66.8% just prior to the beginning of the recession. An improvement in the unemployment rate could be the result of more individuals not pursuing jobs and dropping out of the labor force since they are unable to find employment.

From The Blog of HORAN Capital Advisors

h/t: CNBC

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