Unemployment rate drops from 9.8% to 9.4% as workforce participation drops 0.2%

Today's report was mixed with payroll jobs underperforming and the unemployment rate unexpectedly dropping. Unfortunately, the payroll number is more credible and the rate decline is likely due to more people leaving the workforce. Overall payroll employment in December gained 103K, following a revised 71K rise in November and a 210K boost in October. The December advance came in significantly below analysts' estimate for a 160K gain. However, the October and November revisions were up net 70K. Private sector payrolls increased 113K in December, following a 79K advance the month before. The consensus expected an 180K boost.

Here is the important number:  the participation rate has been reduced from 64.5% to 64.3%.  The unemployment rate drops from 9.8% to 9.4% as there are less people are in the workforce.  As those people return, we will likely see an increase in the unemployment rate. 


Source BLS


Source Bloomberg


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