Drop in jobless rate cheered, minimized

WASHINGTON – The nation’s unemployment rate fell below 8 percent in September for the first time in 3  1/2 years, giving President Barack Obama a boost in the wake of his sluggish debate performance and suggesting the economy may be a bit stronger going into the final months of the year than previously thought.

Overall, employers added 114,000 net new jobs over the month, a relatively modest figure but in line with what analysts had expected. Job growth for July and August was revised considerably higher than previously reported, to 181,000 and 142,000 respectively, the Labor Department said Friday.

Far more surprising was the unusually large decline in the jobless rate, from 8.1 percent in August to 7.8 percent last month. All year, the unemployment figure had hovered between 8.1 percent and 8.3 percent. The September rate is the lowest since January 2009, when Obama was inaugurated as president.

“The jobs numbers were unambiguously positive. Job growth was solid; the gains were broad based across industries. Hours were up, as was wage growth,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics. “The decline in the unemployment rate overstates the case, but a strong case can be made that the job market and economy are steadily improving.”

Democrats, who’ve been subdued in recent months amid sluggish jobs reports, lauded the news.

“Today’s report marks the 31st consecutive month of private-sector job growth. While we continue to add jobs, it is imperative that Republicans and Democrats work together to ensure that our fiscal house is in order and our economic recovery remains on track,” Sen. Bob Casey, D-Pa., the chairman of the Joint Economic Committee of Congress, said in a statement.

GOP presidential candidate Mitt Romney and other Republicans said the jobless rate was still too high.

“This is not what a real recovery looks like. We created fewer jobs in September than in August, and fewer jobs in August than in July,” Romney said in a statement.

At a campaign stop in Virginia, Obama accused Romney of downplaying good news. He said the jobs report “certainly is not an excuse to try to talk down the economy to score a few political points.”

During his own campaign swing later in Abingdon, Va., Romney suggested that there was less to the numbers than met the eye.

“So it looks like unemployment is getting better, but the truth is, if the same share of people were participating in the workforce today as on the day the president got elected, our unemployment rate would be around 11 percent. That’s the real reality of what’s happening out there.”

Friday brought an unusual controversy over the numbers.

Jack Welch, the iconic business guru and former head of General Electric, who supports Romney, all but accused the Obama administration of cooking the books on economic statistics to boost the president’s prospects for re-election right after he fared poorly in the kickoff presidential debate earlier this week.

“Unbelievable jobs numbers,” Welch said on Twitter. “These Chicago guys will do anything … can’t debate so change numbers.”

Labor Secretary Hilda Solis, appearing on CNBC, dismissed the allegation as “ludicrous.”

While economists took the steep drop in unemployment with a grain of salt, they generally agreed that the report overall was evidence of an improving, albeit still tepid, economic recovery.

Significantly, the unemployment rate for September didn’t fall because more people dropped out of the labor force, as in previous months. The average hours worked last month rose, as did workers’ hourly earnings. And the share of the working-age population with jobs – considered an important measure of labor-market health – reached the highest rate in more than two years.

“Absolutely, it’s positive,” said Paul Ashworth, an economist at Capital Economics. “There’s nothing to dislike about it.”

Stock investors reacted cautiously to the employment news.

The White House cheered Friday’s report, coming just two days after Obama’s first debate with Romney.

“Given the dearth of positive news, it’s still a welcomed report,” said Harry Holzer, a professor of public policy at Georgetown University. For Obama, he added, “the timing of this may cut short any strong movement to Romney because of the bad debate.”

The jobs report, the next-to-last one before the Nov. 6 election, takes away one of Romney’s talking points – that, under Obama’s watch, the economy has struggled with more than 8 percent unemployment for 40-plus consecutive months.

Labor Department officials defended the integrity of the jobs report, noting that unemployment rates have fallen by such large magnitudes in the past. Part of the explanation for what happened in September, they said, was that their survey of households – which is the basis for the jobless rate calculation – determined that 873,000 more people were working last month. That’s almost eight times more than what the survey of employers showed in new jobs.

Over time, the two surveys track each other; in fact, averaging the last three months, the job numbers from the two surveys are not that far apart. But the smaller household survey can be much more volatile from month to month, even as it does a better job capturing hiring at new companies and the self-employed.

Despite the apparent discrepancy, economists said the jobs report suggested that the economy had bounced back from the spring doldrums with more pep than previously thought. With the upward revisions for the summer, the nation added on average 146,000 jobs a month in the third quarter. That compares with 67,000 a month in the second quarter.

The revised job numbers also may help explain the disconnect over the summer when consumer confidence steadily improved while reports did not show a corresponding gain in jobs.

Still, analysts remained cautious about the economic outlook, saying one month’s report doesn’t change the trend of a recovery that has been largely bumpy and sluggish. Job growth depends on economic performance, and the most recent indicators show some improving trends, notably in housing, but still weak overall growth.