Jobless rate at lowest level since ’08

But economists fret about participation

The seasonally adjusted national unemployment rate in June was 5.3 percent, the lowest level in more than seven years, which paradoxically was a sign of a weak economy.

The Bureau of Labor Statistics on Thursday reported that employers added 223,000 jobs in June, which helped to lower the unemployment rate two-tenths of a percentage point from May’s rate of 5.5 percent.

But the larger reason that the unemployment rate fell was because 432,000 people left the civilian labor force and were no longer counted as unemployed.

While there are still 8.3 million people who are unemployed, there are another 6.1 million who are out of the labor force because they did not look for a job in the last month, but who reported that they want a job.

The last time the unemployment rate hit 5.3 percent was April 2008, when the labor force participation rate was 65.9 percent. In June, it was 62.6 percent, a new low in the economic recovery and the lowest level since the late 1970s.

Downtown-based PNC Bank’s chief economist Stuart Hoffman said in his analysis of the employment report that a sharp drop of 0.3 percent in the labor force participation rate “means the drop in the unemployment rate to 5.3 percent is not as good as it looks since it is more due to people dropping out of the labor force than finding jobs.”

In the blog post from the White House Council of Economic Advisors, Betsey Stevenson, a member of the council, said the issue may be that the reference week, which is always the week that contains

the 12th day of the month, was earlier than usual, so the normal improvement in employment that takes place in June may not have kicked in. She said the seasonal adjustment may have made the data look worse than it should have.

In a telephone interview, Mr. Hoffman called the report mixed: “There were good job numbers, but the drop in the unemployment rate was too good to be true.”

One bit of good news, he pointed out, was that the number of people who said they were working part-time involuntarily fell by 991,000 over the last year.

Wall Street rose initially on the report, then fell as it became clear that the labor force was shrinking and wages were flat. Stocks were nearly recovered by day’s end.

The Dow Jones Industrial Average closed at 17,727.74, down 30.17 or 0.17 percent; the Standard & Poor’s 500 Index was down 0.93 points, losing 0.04 percent to close at 2,076.49; and the Nasdaq was down 0.08 percent, or 3.91 points, to finish the day at 5,009.21.

U.S. Labor Secretary Thomas E. Perez said in his remarks on the report that businesses have added 12.8 million jobs over the course of the plast 64 months and that the number of people who have been unemployed for more than six months “fell by 381,000, the second largest month-to-month decline on record.”

The report stated job gains were 223,000 in June, but also revised the April job gains from 221,000 down to 187,000 and the May gains from 280,000 to 254,000.

“It’s clear that the economy is continuing to leave workers high and dry,” said Elise Gould, an economist with the Economic Policy Institute, a Washington, D.C.-based economic research organization.