The surge in job growth in February, which was fuelled by a rise in new entrants to the labour force, supports the doves’ view that there is still hidden slack in the labour market. But the story isn’t quite that straightforward. Almost all of the cyclical gap in the prime-age participation rate that opened up since the financial crisis now appears to have closed. However, the recent decline in disability rates, which reverses a decades-long trend, does suggest there is scope for the prime-age participation rate to rise further.
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