Unemployment Rate Drops to Lowest Level Since 2008

The U.S. added 288,000 jobs in April, crushing expectations for growth of just 210,000.

The markets were mixed on the news in early afternoon trading, with the S&P 500 (SNPINDEX: ^GSPC  )  just over breakeven, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) down nearly 12 points, and the Nasdaq  (NASDAQINDEX: ^IXIC  )  up eight points. 

April by the numbers
At first glance, the numbers for April look fantastic. The unemployment rate dropped from 6.7% to 6.3%, and over a quarter of a million new jobs were added nationwide. The labor market looks healthier than it has been since the very onset of the Great Recession.

US Unemployment Rate Chart

US Unemployment Rate data by YCharts.

Digging deeper into the numbers, there is still tremendous reason for optimism.

The number of long-term unemployed -- those who have been unemployed for six months or more -- dropped by 287,000 people (although, 3.5 million Americans are still long-term unemployed).

The number of temporary workers increased by 24,000, an early indicator for potential full-time hires in the months ahead. 

These gains were by and large driven by the private sector. Government jobs increased just by just 15,000 in April, compared with 273,000 new jobs in retail, restaurants, business and professional services, and construction.

The Labor Department even revised the two preceding jobs reports higher, adding 11,000 jobs in March and 25,000 in February.

Baby boomers continue to have an impact
About 700,000 unemployed Americans stopped looking for work in April. This is a huge number, and it was a big reason why the unemployment rate dropped so significantly.

The unemployment rate calculation only includes individuals without a job who are actively looking for employment. Stay-at-home moms, retirees, and the like are not included as "unemployed." 

The combined impact of adding nearly 300,000 jobs with another 700,000 unemployed Americans dropping out of the labor force drove the unemployment rate down 0.4%.

These shuffleboarding retirees are not considered unemployed.

This is not to say that there are no jobs available and that these individuals have succumb to some ill fate. The vast majority are baby boomers entering retirement, which is an established and continuing trend. However, it is always important in understanding any ratio to understand how the various inputs are interacting. 

Looking forward for the long term
This positive news comes right on the heels of this week's disappointing GDP report from the Bureau of Economic Analysis.

Many economists pointed to this winter's particularly cold weather as a drag on the economy and labor market, and they cited this report as confirmation that the warming weather is unleashing that pent-up economic activity.

Next week, the Commerce Department will release data on March's export activity. A strong report there would confirm this theory and offer very positive signs for the rest of 2014.

Sunny days, it seems, are finally here.

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