This is a controversial talking point in the employment report every month – why did the unrate fall? Was it due to people falling out of the labor force or was it from actual job creation? MarketWatch has a nice break-down showing that this month’s decline in the unrate was actually due to job growth and not just the fall in people looking for work:
This is always a key question — why did the unemployment rate fall? Was it from people giving up on looking for a job, or from new jobs? In July, the answer was much more from job creation (the red bar) then from the modest drop in the labor force (the blue bar).