April Employment Report

The unemployment rate continued its rise in April, hitting 8.9%, according to the BLS employment report. However, the news isn't all bad. The rate of decline in employment has slowed (i.e., the second derivative is positive); nonfarm payrolls fell 539,000, compared to a decline of 699,000 in March. Another encouraging sign is that labor force participation rose: As David Leonhardt explains:

[T]he increase in the unemployment rate, to 8.9 percent from 8.5 percent, wasn’t as bad as it sounds. It was nearly all a shift of people from unofficial unemployment — not working and not looking for a job — to official unemployment. The percentage of adults with jobs remained unchanged, at 59.9 percent.

That is, to be counted as "unemployed" people must report that they are looking for work. This may be a sign that some of the people who had given up looking for work - so-called "discouraged workers" - now think its at least worth it to re-enter the job market.

Note that the number of jobs (i.e, "nonfarm payrolls") comes from a survey of firms, while the unemployment rate and labor force participation are based on a survey of households, so the numbers do not generally line up perfectly. The household survey actually reported an increase of 120,000 in the number of employed persons.

Menzie Chinn notes another hopeful sign that the worst may be over: new claims for unemployment insurance are falling.