The US unemployment rate unexpectedly fell to 4.3%, a new multi-year low, but it is a misleading statistic for what was a very disappointing overall report.
Besides the decline in the unemployment rate, and a further decline in the under-employment rate (U-6) from 8.6% to 8.4%, there is little positive in today’s report.
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Non-farm payroll growth fell to 138k, nearly 50k below expectations, which had been bolstered by the weekly jobs claims and the ISM jobs component. Adding insult to injury, the back to months saw jobs growth revised 66k lower than first reported.
Moreover, the drop in the unemployment rate can largely be explained by the decline in the participation rate from 62.9% to 62.7%. This unwinds this year’s improvement in the participation rate, and bring it back to where it finished last year.
