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U.S. unemployment rate falls to 7.8%

CCTV.com

10-06-2012 15:49 BJT

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WASHINGTON, Oct. 5 (Xinhua)-- The U.S. unemployment rate fell to the lowest level since January 2009 in September, the Department of Labor reported on Friday.

But analysts say the decline, which has the potential to change the dynamics of the heated presidential campaign, may not be good enough to improve the whole U.S. job market picture.

The U.S. jobless rate dropped from 8.1 percent in August to 7.8 percent in September, the first time below 8 percent in almost four years and matching the level when President Barack Obama took office.

The closely-watched jobs report was based on two separate surveys. The one with the business showed that the economy added 114,000 nonfarm jobs last month, basically in line with market expectations. Payrolls in the private sector increased by a total of 104,000, while governments posted a gain of 10,000 jobs last month.

The other survey with the households across the country showed that the total employment rose by 873,000 in September, following three months of little change. The number of the jobless people stood at 12.1 million, a decline of 456,000 from the previous month and also the lowest level this year.

Meanwhile, the labor force grew by 418,000 to 155.1 million, bringing the labor participation rate up from 63.5 percent in August to 63.6 percent in September, the highest since March 2010.

The report also revised up the job growth in July and August by a total of 86,000, making the third-quarter job growth even more impressive.

BOOST FOR OBAMA

"The economy has now added private sector jobs for 31 straight months," said Alan B. Krueger, chairman of the Council of Economic Advisors, in a statement. "Over the last 12 months, the unemployment rate has decreased by 1.2 percentage points, the largest drop since February 1995."

After what was viewed as a subpar performance in the first presidential debate on Wednesday night, the jobs number came in as much-needed good news for President Obama.

Before September, the jobless rate had remained stubbornly above 8 percent for the entirety of Obama's first term. With only one month to go before the election, the president and his Republican challenger Mitt Romney sparred over whose policies could better fix the ailing economy and create more jobs for the Americans.

Obama touted the upbeat jobs data in a campaign event on Friday at George Mason University, saying the latest employment report is a reminder that "we are moving forward again."

"This morning, we found that the unemployment rate has fallen to its lowest level since I took office. More Americans entered the workforce. More people are getting jobs," he said.

But Romney commented: "This is not what a recovery looks like. We created fewer jobs in September than in August, and fewer jobs in August than July."

Romney said in a statement that the results of Obama's "failed policies" are staggering -- 23 million Americans are struggling for work, nearly one in six living in poverty and 47 million people dependent on food stamps to feed themselves and their families.

WORRYING SIGNS LINGER

"September's U.S. employment report may have more political than economic significance. The job market's improvement doesn't appreciably alter our forecast for about 2 percent GDP growth this quarter," Mark Zandi, chief economist at Moody's Analytics, responded to the news.

"The drop in the unemployment rate is less encouraging than it appears. The jobless rate fell below 8 percent for the first time since 2009, but it was driven by a large increase in people working part-time for economic reasons. Normally, this would suggest the economy is softening, but it appears technical factors were at play," he added.

Analysts deemed the pace of a 114,000 monthly job growth was still too weak to bring a dent on the jobless rate over time. Another troubling sign would be the 16,000 jobs slashed in the manufacturing sector, which was basically in accord with the weakening trend in recent months.

The policy meeting minutes released by the U.S. Federal Reserve on Thursday showed that top Fed officials generally expected that fiscal policy would continue to be a drag on economic activity over the coming quarters.

The sustainability of the improvement in the labor market is still questionable, especially as business owners are reluctant to hire before the Congress could craft a solution for the "fiscal cliff" featuring large tax hikes and spending cuts at the start of next year.

"Small businesses were largely sidelined in this jobs report as those businesses in retail, services and construction continue to add only few jobs, certainly not typical of a strong recovery," said William C. Dunkelberg, chief economist for the National Federation of Independent Business.

"A more comprehensive measure of unemployment remained at 14.7 percent. Again, this is not at all consistent with substantial improvement in labor market," he added.

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