July Employment Report

The BLS reported a slight decrease in the unemployment rate in July to 9.4% (from 9.5% in June). That's the first decline since February 2008, when the unemployment rate was 4.8%.

Unemployment Rate

While an improvement in the headline number might be good for our animal spirits, the number of people working fell in July, though at a less alarming rate. The decreased unemployment rate was an artifact of people leaving the labor force (see Paul Krugman and Floyd Norris). The labor force participation rate fell to 65.5%.

Labor Force Participation Rate

Though I would not be surprised if the unemployment rate rises again - and it could if a recovering economy draws more people into the labor force - this does give some hope this recession will not break the postwar record of 10.8% set in late 1982.

At Economists' View, Mark Thoma rounds up reaction to the report. See also the Times story.