LABOR FORCE PARTICIPATION RATE FALLS TO LOWEST LEVEL SINCE 1978

The April jobs report beat expectations today. U.S. companies added 288,000 nonfarm payrolls, which was much stronger than the 218,000 expected by economists.

The unemployment rate tumbled to 6.3% from 6.7% a month ago.

However, much of the change in the unemployment rate is due to labor force participation rate, which fell to 62.8% in April from 63.2% in March.

Bloomberg reports this matches the lowest level since 1978.

The LFPR has been falling for a number of reasons including an aging workforce consisting of retiring baby boomers.

Here's a historical chart:

Dan Crawford of the Economic Policy Institute notes that if the LFPR were more stable, the unemployment rate would be much higher at closer to 9.9%.

Bottom line, the drop in unemployment rate is not just about job creation; it's also about fewer people looking for work.