Short-Term Employment Ticks Up, but These Long-Term Indicators Are Still at Crisis Levels

And it’s the long term which counts

A job seeker fills out an application during a career fair in San Francisco, on May 21, 2014. Justin Sullivan/Getty Images

It’s good news! The U.S. economy added 280,000 jobs in May, beating expectations of 226,000. So why did the market sell-off in the early hours of trading?

Because a better job number means the Fed could soon raise interest rates and rates are more important for the stock market than jobs.

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However, some long-term indicators of the job market are still at rock bottom levels, so the stock market took note and started rallying.

A whopping 93 million Americans who are perfectly able to work are still outside the labor force and therefore won’t be counted as unemployed, despite the fact they don’t have jobs. This brings the civilian labor force participation rate (people working and in the labor force divided by the labor force) down to 63 percent, a multidecade low.

Labor force participation has been stagnating at this level for a couple of years now, but in May 397,000 people actually rejoined the labor force, a long-term positive.

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• US Fed Tapering and Its Unintended Consequences

Because the civilian population also added 189,000, another measure, the employment to population ratio only ticked up 0.1 percent to 59.4 percent. A positive, but this ratio is also at levels not seen since the 1980s.

At least the Bureau of Labor Statistics, which publishes all these figures is doing its best to improve the situation. It is looking to hire more than 600 people at the moment.