Jobless Rate Falls to 7.8%, Lowest Since January 2009
While employers added only a modest 114,000 jobs last month, the jobless rate declined from 8.1 percent in August. The unemployment rate fell because more people were working, not because discouraged job seekers stopped looking, the numbers showed.
Adding to the positive news, job gains were revised upward by 40,000 for July (to 181,000) and by 46,000 for August (to 142,000), casting a slightly rosier light on what had been perceived as a summer slump.
Rising employment is good news for President Obama a month before the election as he vies to convince voters that he is better equipped than his Republican opponent, Mitt Romney, to steer the economy back to health.
Though the new numbers were in line with a surge in consumer confidence last month, even before their release some of the president's detractors were trying to suggest that the data were, or could be, manipulated in the incumbent's favor.
On CNBC, Labor Secretary Hilda Solis dismissed the implications as "ludicrous" and there was no evidence of any irregularity.
The Bureau of Labor Statistics, which is part of the Labor Department but has no political appointees at the moment, computes the numbers from two surveys,one of businesses and one of households. By definition, the data in both surveys are not precise and are subject to regular revisions. Recently, those revisions have showed a strengthening labor market, suggesting that if anything the economy may be improving more than initially reported.
Still, Mr. Romney took issue with any positive interpretation of the latest jobs report.
"This is not what a real recovery looks like," he said in a statement. "We created fewer jobs in September than in August, and fewer jobs in August than in July, and we've lost over 600,000 manufacturing jobs since President Obama took office."
Indeed, manufacturing, one of the bright spots that Mr. Obama has showcased throughout the re-election campaign, fell 16,000 jobs after losing a revised 22,000 in August in the face of a global slowdown. And the number of temporary jobs, usually considered a harbinger of future growth, fell 2,000.
Still, while Republicans can criticize the recovery's mincing pace, Democrats can point to the 24th straight month of overall job growth after a severe financial crisis.
Senate Majority Leader Harry Reid, Democrat from Nevada, said the report "shows that the balanced policies advanced by President Obama and Democrats in the House and Senate are working to move our economy forward."
The private sector, which has been adding jobs since March 2010, grew by 104,000 workers in September. Governments, where job cuts have been a drag on the recovery, added 10,000 jobs, their third straight month of gains.
Wages and hours worked ticked up, combining to increase earnings by 0.7 percent, and construction jobs grew by 5,000 as a housing market recovery began to gain momentum.
There are now almost the same number of jobs as when Mr. Obama took office in January 2009. Since the economy stopped hemorrhaging jobs in February 2010, there has been an increase of more than 400,000. A mere 62,000 increase in the number of jobs would allow Mr. Obama to claim a net increase in jobs over his tenure.
This year, the economy has added an average of 146,000 jobs a month. Economists say that job growth of between 100,000 and 175,000 a month is essentially neutral in terms of its effect on the election, while anything greater would favor the incumbent.
Still, Nigel Gault, the chief United States economist at HIS Global Insight, wrote that he believes Friday's report was "highly significant politically" but "less significant economically," noting that underemployment, which counts people who would like to work full time but can find only part-time jobs, was unchanged over August. It was down over the year, from 16.4 million to 14.7 million.
If the jobs report seemed like a tale of two economies - one with a rapidly improving jobless rate, the other with mediocre growth in new jobs - it is because the business and household surveys can often capture very different pictures of what is going on.
The household survey, which showed a whopping increase of 873,000 people working, is much more volatile and prone to sampling error. But it captures aspects of the labor market that the business survey does not, like self-employment, household workers and farm workers. Economists said that this month's household survey likely overstated the improvement, but deserved credibility because it matched the unexpectedly robust rise in consumer confidence in September.
Critics can be quick to write off a falling jobless rate as the result of job seekers who grow discouraged and stop looking for work, meaning they are no longer counted as part of the labor force. But that is not the story of the past year.
Participation in the labor force has inched up, even though demographic factors like the aging population would suggest that it should be falling, depressed economy aside. "The labor force is not growing as much as the population is growing but the number of people employed and the employment-to-population ratio are growing," said Betsey Stevenson, a labor economist and professor of public policy at the University of Michigan. "That's what you need to bring the unemployment rate down."
Representative Kevin Brady, a Republican from Texas and vice chairman of the joint economic committee, said the drop in the unemployment rate "was driven primarily by an increase of 582,000 in the number of workers employed involuntarily in part-time jobs. These workers need and want full-time jobs." About 6 percent of all workers are part-time when they would prefer to work full-time.
Like Republicans and Democrats, consumers and businesses have divergent views of the economic situation. Consumers have shown increasing confidence as stocks rise, home prices stabilize and their perception of the job market becomes sunnier.
Business leaders have been hanging back, though, more focused on global economic slowing and domestic concerns. They say they are uncertain what the election will mean for the business climate and are waiting in part for a resolution of the so-called fiscal cliff, a host of tax increases and budget cuts that will be triggered at the end of the year if Congress fails to act.
Harry Kazazian, the chief executive officer of Exxel Outdoors, a maker of camping equipment in Alabama, said the election, the fiscal cliff and rapidly shifting regulations had put him in a cautious mood.
With sales on the rise, Exxel has restarted a capital investment plan that it suspended three years ago, but is doing so slowly. "We're moving forward, but we're doing it in steps rather than being much more aggressive and putting ourselves out there," Mr. Kazazian said. "I wouldn't be surprised if things start turning the other way, meaning down."
But at a Walmart in Atlanta, shoppers were loosening the reins a bit, buying what they described as small indulgences like scented candle oil and seasonal beer.
Linda Avery, 50, a food service manager, said her income had not changed but her daughter had moved out of the house, reducing her food and utility expenses.
Michael Peacock, 43, said that although his house was in foreclosure, his chosen field, online marketing, was improving to the point where he could even turn down some jobs that were outside his specialty.
"I can see people shopping," Ms. Avery said, surveying the store. "You just feel like things are getting a little better."
The polling firm Gallup pinpointed September's rise in consumer confidence to the first day of the Democratic National Convention, and said it was almost entirely because of increased optimism among Democrats, while confidence among Republicans held steady at low levels. But Gallup could not say whether politics or improving economic conditions drove the change.
The discrepancy between consumers' mood and the outlook of companies can be easily explained, economists said. "Businesses are much more forward looking," said Ellen Zentner, the senior United States economist for Nomura Securities International.
Concerns over the fiscal cliff had begun showing up in business surveys in April, she said. "It's been weighing on their investment and hiring decisions for quite some time."
In a survey of 400 chief financial officers conducted this summer, Grant Thornton, a management consulting firm, found that many had shifted from neutrality to pessimism, with 45 percent of respondents saying they expected their work force to hold steady and 18 percent saying they expected it to shrink over the next six months. A large majority said they expected both health care costs and salaries to increase.
Stephen Chipman, the chief executive of Grant Thornton, said there appeared to be genuine growth in the technology, high-end manufacturing and energy sectors, while growth in health care was largely a result of consolidation and increased efficiency, and financial service hiring was largely driven by the need to comply with more regulations.
Still, the overall picture may be better than previously thought. Monthly job estimates are notoriously imprecise and often fall within the margin of error, and the adjustment process is slow.
In an annual recalibration last month, the Bureau of Labor Statistics estimated that there were actually 400,000 more jobs added in the 12 months that ended in March than was previously thought. That benchmark will not be incorporated into the monthly jobs figures until early next year.