The unemployment rate fell to 3.9 percent in April, the lowest rate since 2000. It has only been below this level for one month in the last 45 years. However, in spite of the drop in unemployment, other aspects of the report were less encouraging. Most importantly, wage growth remains weak. The average hourly wage increased by just 4 cents in April, bringing the year-over-year increase to 2.6 percent. There is no evidence of acceleration.

The drop in the unemployment rate was also due to the reported drop in labor force participation, the second consecutive drop, not an increase in employment in the household survey. There was also a drop in the percentage of unemployment attributable to voluntary quits. The 12.7 percent share is still near the high for this recovery, but well below the rates of 14 percent or more seen in 2000. This suggests that, in spite of the low unemployment rate, workers are still not confident about their labor market prospects.