The Labor Department reported that nonfarm payrolls rose by 165,000 in April and the jobless rate fell to its lowest level since December 2008, from 7.6 percent to 7.5 percent. Upward revisions of 114,000 to prior payrolls data and positive fundamentals behind the lower unemployment rate make this one of the best labor reports in some time.

The jobless rate fell from 7.57 percent to 7.51 percent and the improvement was due to factors other than people leaving the labor force (and no longer being counted as unemployed). The number of employed people rose by 293,000 while the number of unemployed fell by 83,000 and the labor force increased by 210,000.

Persons not in the labor force but who still want a job – a key factor in the recent labor market weakness – dropped by 309,000, the biggest monthly decline since late-2011.

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An interesting chart popped up at FT Alphaville the day after the highly anticipated non-showdown between David Stockman and Paul Krugman on Sunday’s This Week and, while I’ve not kept up on the online debate between these two (and any further discussion about the labor force participation rate), one look at this evidence and it seems clear that Stockman won Sunday’s argument on this topic.

Basically, Krugman said to ignore the plunging participation rate because it mostly reflects the demographics of baby boomers retiring, but that’s disputed by the chart below:

According to this, the decline in the labor force participation rate is due mostly to twenty somethings, not retiring baby boomers, and, in fact, the participation rate would be even worse if not for the ranks of the 55+ year olds who are still working or looking for work.

Here’s the excerpt from the transcript at ABC News:

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After this morning’s labor report (as detailed here a short time ago), I was curious to see what the change in nonfarm payrolls might look like when laid up against the change in “Not in the labor force” (aka NILF). I wasn’t sure what to expect, but the result is shown below.

NILF is s very noisy data series, hence the use of the three-month average change, and retiring baby boomers are surely pushing this data series higher with each passing month. Nonetheless, a key takeaway here is that it’s pretty unusual to have the change in NILF exceeding the change in NFP almost four years after the end of a recession.

In fact, over the last 15 months, while nonfarm payrolls have risen by 2.7 million, the number of people who have left the labor force has increased by 3.3 million.

The Labor Department reported that U.S. employers added just 88,000 jobs in March, though prior months saw large upward revisions, and the unemployment rate fell from 7.7 percent to 7.6 percent, due largely to more people dropping out of the labor force as the participation rate fell from 63.5 percent to 63.3 percent, the lowest level since 1979.

While the March payroll gains came in well below expectations of nearly 200,000, January payrolls were revised up from 119,000 to 148,000 and February job gains rose from 236,000 to 268,000 for a total upward revision of 61,000. This does, however, add credence to the idea that job growth has slowed sharply recently as noted in this Gallup survey.

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