Jobs report suggests last month’s blip may be turning into an unfortunate trend

This morning’s jobs report showed that the economy added a disappointing 38,000 jobs in May. While this number is depressed by the 35,000 Verizon workers who were striking during the reference period, even adding those workers back into the mix gives us a total number that’s lower than recent trends.

Payroll job growth has averaged only 116,000 jobs the past three months, and 150,000 this year so far. This is a noticeable slowdown compared to the growth in jobs last year (which averaged 229,000 per month). While the pace of job growth is expected to slow as the economy approaches full employment, May’s rate of growth was not even strong enough to keep up with growth in the working age population.

The unemployment rate fell to 4.7 percent—typically a sign of a strengthening economy, but in this case, the fall is almost entirely due to would-be workers dropping out of the labor force. This is especially troubling for the prime-age workforce, those 25-54 years old (shown in the figure below). After hitting a low-point of 80.6 percent in September 2015, the prime-age labor force participation rate (LFPR) has been on the rise, reaching 81.4 percent in March. I expected the downward blip in April to be followed by a return to the recent upward trend. Unfortunately, it appears that the “blip” continued, with the LFPR falling 0.2 percentage points two months in a row down to 81.0 percent.

Jobs Day

Labor force participation rate of workers ages 25-54, 1989–2016

25-54
Jan-1989 83.5
Feb-1989 83.4
Mar-1989 83.3
Apr-1989 83.3
May-1989 83.2
Jun-1989 83.2
Jul-1989 83.3
Aug-1989 83.3
Sep-1989 83.6
Oct-1989 83.5
Nov-1989 83.8
Dec-1989 83.7
Jan-1990 83.8
Feb-1990 83.8
Mar-1990 83.6
Apr-1990 83.5
May-1990 83.5
Jun-1990 83.4
Jul-1990 83.4
Aug-1990 83.4
Sep-1990 83.4
Oct-1990 83.4
Nov-1990 83.5
Dec-1990 83.4
Jan-1991 83.2
Feb-1991 83.5
Mar-1991 83.4
Apr-1991 83.7
May-1991 83.4
Jun-1991 83.4
Jul-1991 83.3
Aug-1991 83.4
Sep-1991 83.4
Oct-1991 83.4
Nov-1991 83.4
Dec-1991 83.2
Jan-1992 83.5
Feb-1992 83.4
Mar-1992 83.5
Apr-1992 83.7
May-1992 83.8
Jun-1992 83.9
Jul-1992 83.8
Aug-1992 83.8
Sep-1992 83.6
Oct-1992 83.5
Nov-1992 83.5
Dec-1992 83.4
Jan-1993 83.3
Feb-1993 83.1
Mar-1993 83.2
Apr-1993 83.2
May-1993 83.4
Jun-1993 83.6
Jul-1993 83.5
Aug-1993 83.5
Sep-1993 83.4
Oct-1993 83.5
Nov-1993 83.6
Dec-1993 83.6
Jan-1994 83.4
Feb-1994 83.5
Mar-1994 83.3
Apr-1994 83.2
May-1994 83.3
Jun-1994 82.9
Jul-1994 83.2
Aug-1994 83.3
Sep-1994 83.6
Oct-1994 83.5
Nov-1994 83.6
Dec-1994 83.5
Jan-1995 83.5
Feb-1995 83.6
Mar-1995 83.5
Apr-1995 83.7
May-1995 83.5
Jun-1995 83.3
Jul-1995 83.4
Aug-1995 83.3
Sep-1995 83.5
Oct-1995 83.4
Nov-1995 83.5
Dec-1995 83.4
Jan-1996 83.5
Feb-1996 83.5
Mar-1996 83.5
Apr-1996 83.6
May-1996 83.7
Jun-1996 83.6
Jul-1996 83.9
Aug-1996 84
Sep-1996 83.9
Oct-1996 84.1
Nov-1996 84.1
Dec-1996 84.1
Jan-1997 84
Feb-1997 83.9
Mar-1997 84
Apr-1997 84
May-1997 83.8
Jun-1997 84.1
Jul-1997 84.3
Aug-1997 84.5
Sep-1997 84.3
Oct-1997 84.2
Nov-1997 84
Dec-1997 84.1
Jan-1998 84
Feb-1998 84.1
Mar-1998 84.2
Apr-1998 83.9
May-1998 83.9
Jun-1998 84
Jul-1998 84.1
Aug-1998 84.1
Sep-1998 84.2
Oct-1998 84.1
Nov-1998 84.1
Dec-1998 84.2
Jan-1999 84.6
Feb-1999 84.4
Mar-1999 84
Apr-1999 84.1
May-1999 84.1
Jun-1999 84.1
Jul-1999 83.9
Aug-1999 84
Sep-1999 84
Oct-1999 84.1
Nov-1999 84.2
Dec-1999 84
Jan-2000 84.4
Feb-2000 84.4
Mar-2000 84.3
Apr-2000 84.4
May-2000 84.1
Jun-2000 84.1
Jul-2000 83.9
Aug-2000 83.8
Sep-2000 83.7
Oct-2000 83.6
Nov-2000 83.8
Dec-2000 83.9
Jan-2001 84.1
Feb-2001 84.1
Mar-2001 84.1
Apr-2001 83.7
May-2001 83.8
Jun-2001 83.6
Jul-2001 83.6
Aug-2001 83.5
Sep-2001 83.5
Oct-2001 83.6
Nov-2001 83.5
Dec-2001 83.7
Jan-2002 83.5
Feb-2002 83.7
Mar-2002 83.5
Apr-2002 83.6
May-2002 83.6
Jun-2002 83.2
Jul-2002 83.1
Aug-2002 83.2
Sep-2002 83.3
Oct-2002 83.2
Nov-2002 82.9
Dec-2002 83.1
Jan-2003 82.9
Feb-2003 83
Mar-2003 83.1
Apr-2003 83.2
May-2003 83.1
Jun-2003 83.3
Jul-2003 83
Aug-2003 83
Sep-2003 82.8
Oct-2003 82.9
Nov-2003 82.8
Dec-2003 82.8
Jan-2004 82.8
Feb-2004 82.7
Mar-2004 82.8
Apr-2004 82.7
May-2004 82.8
Jun-2004 82.9
Jul-2004 83
Aug-2004 82.7
Sep-2004 82.7
Oct-2004 82.6
Nov-2004 82.7
Dec-2004 82.6
Jan-2005 82.7
Feb-2005 82.8
Mar-2005 82.6
Apr-2005 82.7
May-2005 82.9
Jun-2005 82.6
Jul-2005 82.8
Aug-2005 82.9
Sep-2005 82.9
Oct-2005 82.7
Nov-2005 82.7
Dec-2005 82.7
Jan-2006 82.8
Feb-2006 82.9
Mar-2006 83
Apr-2006 82.8
May-2006 82.8
Jun-2006 82.8
Jul-2006 83
Aug-2006 82.9
Sep-2006 82.9
Oct-2006 82.9
Nov-2006 83
Dec-2006 83.1
Jan-2007 83.4
Feb-2007 83.2
Mar-2007 83.2
Apr-2007 83
May-2007 83
Jun-2007 82.9
Jul-2007 82.9
Aug-2007 82.9
Sep-2007 82.8
Oct-2007 82.7
Nov-2007 82.9
Dec-2007 83.1
Jan-2008 83.3
Feb-2008 83.2
Mar-2008 83.3
Apr-2008 83.1
May-2008 83.1
Jun-2008 83.1
Jul-2008 83.1
Aug-2008 83.2
Sep-2008 83.1
Oct-2008 83
Nov-2008 83
Dec-2008 82.8
Jan-2009 82.8
Feb-2009 82.8
Mar-2009 82.6
Apr-2009 82.8
May-2009 82.9
Jun-2009 82.9
Jul-2009 82.8
Aug-2009 82.8
Sep-2009 82.5
Oct-2009 82.5
Nov-2009 82.4
Dec-2009 82
Jan-2010 82.4
Feb-2010 82.3
Mar-2010 82.4
Apr-2010 82.6
May-2010 82.3
Jun-2010 82.2
Jul-2010 81.9
Aug-2010 82
Sep-2010 82
Oct-2010 81.8
Nov-2010 82
Dec-2010 81.9
Jan-2011 81.7
Feb-2011 81.6
Mar-2011 81.7
Apr-2011 81.7
May-2011 81.7
Jun-2011 81.7
Jul-2011 81.4
Aug-2011 81.6
Sep-2011 81.5
Oct-2011 81.3
Nov-2011 81.5
Dec-2011 81.6
Jan-2012 81.6
Feb-2012 81.5
Mar-2012 81.5
Apr-2012 81.4
May-2012 81.4
Jun-2012 81.5
Jul-2012 81.4
Aug-2012 81.4
Sep-2012 81.5
Oct-2012 81.6
Nov-2012 81.2
Dec-2012 81.4
Jan-2013 81.1
Feb-2013 81.1
Mar-2013 81
Apr-2013 81
May-2013 81.2
Jun-2013 81.1
Jul-2013 81.2
Aug-2013 81
Sep-2013 81
Oct-2013 80.6
Nov-2013 81
Dec-2013 80.8
Jan-2014 81
Feb-2014 81.1
Mar-2014 81.2
Apr-2014 80.8
May-2014 80.7
Jun-2014 80.9
Jul-2014 80.8
Aug-2014 81.1
Sep-2014 80.8
Oct-2014 80.9
Nov-2014 80.8
Dec-2014 80.9
Jan-2015 81.1
Feb-2015 81
Mar-2015 80.9
Apr-2015 81
May-2015 81
Jun-2015 80.7
Jul-2015 80.7
Aug-2015 80.7
Sep-2015 80.6
Oct-2015 80.8
Nov-2015 80.8
Dec-2015 80.9
Jan-2016 81.1
Feb-2016 81.2
Mar-2016 81.4
Apr-2016 81.2
May-2016 81.0
Jun-2016 81.2
Jul-2016 81.2
Aug-2016 81.3
Sep-2016 81.5
Oct-2016 81.6
ChartData Download data

The data below can be saved or copied directly into Excel.

Source: EPI analysis of  Bureau of Labor Statistics' Current Population Survey public data

Copy the code below to embed this chart on your website.

While the economy has otherwise been steadily improving, the prime-age labor force participation rate has far to go before even reaching its lowest point in the last two business cycles, let alone recovering to full employment. The Federal Reserve should certainly bear this in mind when it meets later this month and not be too quick to raise rates and slow the economy.