The unemployment rate in the U.S. unexpectedly fell to 7.8 percent in September, the lowest since President Barack Obama took office in January 2009, as employers took on more part-time workers.
The economy added 114,000 workers last month after a revised 142,000 gain in August that was more than initially estimated, Labor Department figures showed today in Washington. The median estimate of 92 economists surveyed by Bloomberg called for an advance of 115,000. The jobless rate dropped from 8.1 percent and hourly earnings climbed more than forecast.
Stocks and Treasury yields advanced as investors bet an improving job market will give workers with the wherewithal to boost their spending, helping cushion the economy from a global slowdown. Today's employment report is the penultimate before the November elections as Obama and Republican challenger Mitt Romney debate whose policies would best spur job growth.
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"The job market is healing," said Ryan Sweet, senior economist at Moody's Analytics Inc. in West Chester, Pennsylvania, who forecast payrolls would rise by 115,000. "If the job market holds together, the economy is in for a decent fourth quarter."
The Standard & Poor's 500 Index rose 0.6 percent to 1,469.72 at 10:41 a.m. in New York. The yield on the benchmark 10-year Treasury note climbed to 1.72 percent from 1.67 percent late yesterday.
Payrolls projections in the Bloomberg survey ranged from increases of 60,000 to 165,000 following an initially reported 96,000 gain in August. Revisions to July and August added a total of 86,000 jobs to payrolls in the previous two months.
The unemployment rate, derived from a separate survey of households, was forecast to rise to 8.2 percent, according to the survey median. Estimates ranged from 8 percent to 8.3 percent.
The drop in the unemployment rate gives Obama a new chance to talk about an improving economy and reset the campaign after a tepid debate performance against Romney.
"It's good news for Obama," said Alan Abramowitz, a political scientist at Emory University in Atlanta. The drop in unemployment to under 8 percent is "symbolically important" to voters.
The White House and the Romney campaign used today's numbers to continue their debate over the state of the economy and the labor market.
"The economy is continuing to heal," Alan Krueger, chairman of the White House Council of Economic Advisers, said in an interview with Bloomberg Television. "Certainly there's a lot more work that needs to be done, but we are digging our way out of a very deep hole."
'Real Recovery'
"This is not what a real recovery looks like," Romney said in a statement. "We created fewer jobs in September than in August, and fewer jobs in August than in July."
Only one president, Ronald Reagan, has been re-elected since World War II with unemployment above 6 percent. On Election Day 1984, the rate was at 7.2 percent, having fallen almost three percentage points in the previous 18 months.
Obama last September proposed the American Jobs Act, which would cut payroll taxes for workers and employers, provide aid to states and increase spending on public-works projects. Romney has vowed to create 12 million new jobs as part of a plan that includes developing the energy sector and reducing taxes.
Among companies hiring is Lenovo Group Ltd. The Beijing-based computer maker said this week that it's starting a production line in Whitsett, North Carolina, that will create 115 jobs.
The labor market has finally become brighter for Jennifer Arnold. The 39-year-old started her job as an assistant grant writer at United Way in Columbus, Ohio, this month after being unemployed for a year and a half. She relied on networking and career counseling to help secure the new position.
"It wasn't easy," said Arnold, who has a master's degree in public administration. "Sometimes I just couldn't even do it because it was just too much."
The household survey showed an 873,000 increase in employment, the biggest since June 1983, excluding the annual Census population adjustments. Some 582,000 Americans took part-time positions because of slack business conditions or those jobs were the only work they could find.
Private payrolls, which exclude government agencies, rose by 104,000 in September. They were projected to advance by 130,000, the survey showed.
Factory Jobs
Factories eliminated 16,000 positions, compared with the survey forecast of no change and following a 22,000 decrease in the previous month.
Employment at private service-providers increased 114,000. Construction companies added 5,000 workers, and retailers hired 9,400 more employees.
Government payrolls increased by 10,000 after a 45,000 jump the month before.
Average hourly earnings climbed 0.3 percent to $23.58, today's report showed.
The so-called underemployment rate — which includes part-time workers who'd prefer a full-time position and people who want work but have given up looking — held at 14.7 percent.
Companies may hold back on hiring plans amid concern over Europe's weakening economy and the so-called fiscal cliff, a combination of tax increases and government spending cuts that will occur next year if Congress doesn't act.
The share of U.S. chief executive officers planning to add employees or invest more in the next six months declined last quarter, and a bigger share said they'd cut jobs and spending, according to a Business Roundtable survey last month. The group's economic-outlook index slumped to the lowest since 2009.
"Over the past several months, we've seen the economy lose some of the momentum it had generated coming into the year," Carl Camden, president and chief executive officer at temporary-staff provider Kelly Services Inc., said during a Sept. 13 conference. About a year ago, "we were seeing good signs of a fairly solid recovery. But all of that is definitely slowed and you see that in staffing volumes around the world."
Signaling that it can't combat a slowdown in growth caused by stricter fiscal policy, the Fed last month said it would hold its target interest rate near zero until at least mid-2015 to stimulate more hiring. The central bank also began a third round of stimulus, buying $40 billion in mortgage bonds a month. The S&P 500 rose the next day to its highest close since December 2007.
"We're looking for ongoing, sustained improvement in the labor market," Fed Chairman Ben S. Bernanke told reporters following the announcement on Sept. 13. "What we've seen in the last six months isn't it."
Bloomberg News
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