US unemployment below 8 pct, first time since 2009

CHRISTOPHER S. RUGABER

PAUL WISEMAN

AP Eco­nom­ics Writers

WASHINGTON — The U.S. unem­ploy­ment rate dropped below 8 per­cent for the first time since the month Pres­i­dent Barack Obama took office, a sur­pris­ing lift for both the econ­omy and his re-election hopes in the final weeks of the campaign.

The rate, the most-watched mea­sure of the country’s eco­nomic health, tum­bled to 7.8 per­cent in Sep­tem­ber from 8.1 per­cent in August. It fell because a gov­ern­ment sur­vey of house­holds found that 873,000 more peo­ple had jobs, the biggest jump since Jan­u­ary 2003.

The government’s other monthly sur­vey, of employ­ers, showed they added a mod­est 114,000 jobs in Sep­tem­ber, but it also showed job growth in July and August was stronger than first thought.

Obama, eager to shift atten­tion from a dis­ap­point­ing per­for­mance at the first pres­i­den­tial debate, said Fri­day that the report showed the coun­try “has come too far to turn back now.”

His Repub­li­can oppo­nent, Mitt Rom­ney, coun­tered: “This is not what a real recov­ery looks like.”

The drop brought the job­less rate back to where it was when Obama was sworn in, in Jan­u­ary 2009, and snapped a 43-month streak in which unem­ploy­ment was 8 per­cent or higher — a run Rom­ney had been emphasizing.

The Octo­ber jobs report comes out Nov. 2, four days before the elec­tion, so Friday’s report pro­vided one of the final snap­shots of the econ­omy as unde­cided vot­ers make up their minds.

The gov­ern­ment cal­cu­lates the unem­ploy­ment rate by call­ing 60,000 house­holds and ask­ing whether the adults have jobs, and whether those who don’t are look­ing for work.

Those who do not have jobs and are look­ing are counted as unem­ployed. Those who aren’t look­ing are not con­sid­ered part of the work force and aren’t counted as unemployed.

A sep­a­rate monthly sur­vey seeks infor­ma­tion from 140,000 com­pa­nies and gov­ern­ment agen­cies that together employ about one in three non­farm work­ers in the United States.

That sur­vey found that the econ­omy added 114,000 jobs in Sep­tem­ber, the fewest since June. Most of the job growth came in ser­vice busi­nesses such as health care and restaurants.

The Labor Depart­ment raised its job-creation fig­ures by a total of 86,000 jobs for July and August. The July fig­ure was revised from 141,000 to 181,000, and the August fig­ure from 96,000 to 142,000.

Taken together, the two sur­veys sug­gest the job sit­u­a­tion in the United States is bet­ter than was thought.

Econ­o­mist Joel Naroff, pres­i­dent of Naroff Eco­nomic Advi­sors, called the strong employ­ment reports “a shocker” that showed the job mar­ket was stur­dier than most econ­o­mists had thought.

Finan­cial mar­kets seemed less impressed. The Dow Jones indus­trial aver­age climbed as much as 86 points in early trad­ing but drifted lower for most of the rest of the day. It fin­ished up 34 points at 13,610. The Stan­dard & Poor’s 500 index, a broader mea­sure, was down a frac­tion of a point.

Stock indexes have been trad­ing at or near their high­est lev­els since Decem­ber 2007, the month the Great Reces­sion began. They have got­ten a lift from Fed­eral Reserve efforts to stim­u­late the econ­omy, and by a Euro­pean Cen­tral Bank plan to buy the bonds of finan­cially trou­bled coun­tries to ease a debt cri­sis there.

The yield on the bench­mark 10-year U.S. Trea­sury note climbed by 0.06 per­cent­age point to 1.73 per­cent, a sign that investors were more will­ing to embrace risk and leave the rel­a­tive safety of the bond market.

The unem­ploy­ment fig­ures were so sur­pris­ingly strong that some pun­dits and at least one mem­ber of Con­gress, Florida Repub­li­can Allen West, accused the Obama admin­is­tra­tion of manip­u­lat­ing the sta­tis­tics to help the president’s prospects.

On Wednes­day, Obama was widely seen as hav­ing lost his first debate with Romney.

Jack Welch, the retired for­mer CEO of Gen­eral Elec­tric, said on Twit­ter: “Unbe­liev­able jobs num­bers … these Chicago guys will do any­thing … can’t debate so change numbers.”

But the unem­ploy­ment data is cal­cu­lated by a gov­ern­ment agency, the Bureau of Labor Sta­tis­tics, under tight secu­rity and with no over­sight or input from the White House.

Keith Hall, a for­mer com­mis­sioner of the BLS who was appointed by Pres­i­dent George W. Bush, said the num­bers could not have been manipulated.

“It’s impos­si­ble to do it and get away with it,” he said. “These num­bers are very trustworthy.”

Econ­o­mists offered rea­sons not to read too much into them, though. Most of the increase in employed Amer­i­cans came from those who had to set­tle for part-time work: 582,000 more peo­ple reported that they were work­ing part-time last month but wanted full-time jobs.

That is the biggest increase in so-called under­em­ployed Amer­i­cans since Feb­ru­ary 2009, dur­ing the depths of the Great Recession.

Eco­nomic trou­bles in Europe and Asia also may be tak­ing a toll on Amer­i­can fac­to­ries. Man­u­fac­tur­ing employ­ment dropped by 16,000 in Sep­tem­ber after falling by 22,000 in August.

Fac­tory hir­ing had been a source of eco­nomic strength the past two years: Fac­tory jobs rose last year at the fastest pace since 1997.

But Europe’s ongo­ing eco­nomic cri­sis, along with a slow­down in China, means demand for U.S.-made goods is dry­ing up and “the days of robust man­u­fac­tur­ing pay­rolls growth are likely behind us,” said Chris Jones, an econ­o­mist at TD Economics.

The unem­ploy­ment rate has fallen from a peak of 10 per­cent in Octo­ber 2009. But a big part of the drop over the past three years came because so many Amer­i­cans stopped look­ing for work, so they weren’t counted as unemployed.

Some were retir­ing baby boomers. Oth­ers were so dis­cour­aged by the weak job mar­ket that they stopped putting out resumes.

Econ­o­mists were pleased with September’s drop in unem­ploy­ment because it hap­pened for the right rea­sons: More Amer­i­cans got jobs. And the work force grew by 418,000, the most since Feb­ru­ary, sug­gest­ing peo­ple are more opti­mistic about find­ing jobs. Because 873,000 more peo­ple did find work, the num­ber of unem­ployed fell by 456,000. And that decline pushed the unem­ploy­ment rate down.

Arthur Nazh was not sur­prised to hear that the unem­ploy­ment rate fell. Busi­ness has improved this year at the kiosk where he sells sou­venirs at a mall in Arling­ton, Va.

The econ­omy “is get­ting bet­ter,” said Nazh, 27, who employs six peo­ple and said he plans to vote for Obama because the econ­omy needs more time to heal. “Peo­ple are start­ing to buy more, spend more money.”

Obama and Rom­ney cam­paigned Fri­day in Nazh’s home state and oth­ers that could tip to either can­di­date and deter­mine the out­come of the elec­tion. Rom­ney released three ads, mostly focused on jobs.

“These are tough times in this com­mu­nity,” Rom­ney, the for­mer Mass­a­chu­setts gov­er­nor, told a rally out­side a con­struc­tion equip­ment store in Abing­don, Va. “We’re going to bring back jobs and bring back America.”

At a cam­paign stop in Cleve­land, Obama declared: “We are mov­ing for­ward again.”

“Today’s news should give us some encour­age­ment,” the pres­i­dent told thou­sands at Cleve­land State Uni­ver­sity. “It shouldn’t be an excuse for the other side to try to talk down the econ­omy just to try to score a few polit­i­cal points.”

The polit­i­cal back-and-forth over the unem­ploy­ment num­bers under­scored the cen­tral­ity of jobs to the elec­tion after a year in which the econ­omy has been dif­fi­cult to read.

The job mar­ket got off to a strong start in 2012. Employ­ers added an aver­age 226,000 jobs the first three months of the year.

Hir­ing in Jan­u­ary, Feb­ru­ary and March was prob­a­bly even stronger than that: The Labor Depart­ment has said 386,000 more jobs were cre­ated in the year that ended in March, but it has not assigned the jobs to spe­cific months yet.

Job growth slowed sharply to an aver­age 67,000 a month from April through June. And the weak­ness appeared to have con­tin­ued into the sum­mer, rais­ing fears that a slow and steady eco­nomic recov­ery was los­ing momentum.

But the revi­sions to the July and August fig­ures on Fri­day eased those fears some­hwat. Monthly job growth was back up to an aver­age 146,000 from July through September.

Naroff, the econ­o­mist, pre­dicted that unem­ploy­ment would inch back up, and that job growth would set­tle at about 150,000 per month for the next sev­eral months. Econ­o­mists at PNC Finan­cial Ser­vices Group pre­dict job growth will accel­er­ate to 170,000 per month in 2013.

The econ­omy is still far from full health. The num­ber of U.S. jobs peaked in Jan­u­ary 2008, a month after the Great Reces­sion offi­cially started, at 138 mil­lion. The job mar­ket shed 8.8 mil­lion jobs by Feb­ru­ary 2010. Since then, the econ­omy has regained 4.6 mil­lion, or a lit­tle more than half, of those lost jobs.

No incum­bent pres­i­dent since Ger­ald Ford in 1976 has faced re-election when the unem­ploy­ment rate was as high as September’s 7.8 per­cent, even after the sharp drop from August. Ford lost to Jimmy Carter.

Ronald Rea­gan faced 7.2 per­cent unem­ploy­ment in 1984 and trounced Wal­ter Mon­dale to win a sec­ond term.

Posted by AP News on Oct 7 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.