The Bureau of Labor Statistics' latest employment report shows that unemployment dropped to 9.4 percent, the largest percentage-point drop since April of 1998. However, much of the reason for the decline was a drop of 260,000 in the size of the labor force. While the reported gain of 290,000 jobs in BLS' household survey is healthy, it's inconsistent with so many people leaving the labor force and may just be an aberration. It is worth noting that average weekly unemployment claims are still averaging more than 400,000. The economy did not start generating jobs at all following the last recession until weekly claims fell below 400,000 in 2003.
On the whole, this report does not suggest a very positive picture of the labor market going into 2011. The decline in the unemployment rate is certainly positive, but with employment-to-population ratios (EPOPs) hovering near their low point for the downturn, the main story appears to be people giving up looking for work. Furthermore, there is no sector that appears to be experiencing robust job growth at the moment, nor any likely candidates for the near future.
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