Hurdle Looms for Falling Jobless Rate as Participation Steadies

By Jeanna Smialek Aug 1, 2014 12:10 PM ET

The labor-force participation rate is starting to stabilize, putting the onus on hiring to push down joblessness in the U.S.

The share of Americans employed or looking for work rose to 62.9 percent in July, Labor Department data showed today. The increase helped push up the unemployment rate to 6.2 percent from 6.1 percent in June as some applicants failed to land a job. Over the past nine months, participation has gained 0.1 percentage point, the best performance over a similar period since 2008.

The decline in the participation rate, which is still close to a 36-year low of 62.8 percent, became more pronounced after the last recession as the unemployed gave up on the workforce or decided to retire. Halting the slide will depend on a pickup in the number of job-seekers, meaning faster hiring would be needed to keep the jobless rate falling at the same pace.

“We’ve been thinking for a while now that 2014 should be the year when the labor-force participation rate levels off and may even start to increase slightly,” said Robert Stein, deputy chief economist at First Trust Portfolios LP in Wheaton, Illinois. That means “we would need faster growth in the year ahead to bring down the unemployment rate compared to the past year.”

A stable or rising participation rate is a positive economic signal: It means people believe jobs are plentiful enough to make diving back into the search worthwhile.

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http://www.bloomberg.com/news/2014-08-01/hurdle-looms-for-falling-jobless-rate-as-participation-steadies.html