Participation Rate at 62.3%, Not Good News For The Labor Market

While Non Farm Payrolls surprised at 147,000 in June, 2025, underlying data suggests a continued weakening in the labor market. The key is noting the Participation Rate.

The Participation Rate shows how people feel about finding a job. When it goes higher, it shows more people feel they can get a job. When it goes lower, it shows more people dropping out of seeking a job. When they do this, it signals a hopeless feeling after looking for jobs for an extended amount of time and not finding any. Eventually, the job seeker gives up.

When the participation rate drops, this shows people giving up. That is the start of a weakening labor market. The Unemployment Rate still being low shows people have jobs, but a drop in the participation rate shows people are having a very hard time finding new jobs. Historically, this has been a precursor to rising unemployment.