Job growth remained tame in September, but a big drop in the unemployment rate sparked a huge debate about what this meant for the economy — and the presidential race.
The US economy created just 114,000 new jobs last month, while the unemployment rate skidded to 7.8 percent, the first time it has been below 8 percent in 44 months.
The Bureal of Labor Statistics’ nonfarm paryolls report presented a slew of contradictory data points, with the total employment level soaring despite the low net number.
The falling jobless rate had been a function as much of the continued shrinking in the labor force as it was an increase in new positions.
But the government said the total number of workers employed surged by 873,000, the highest one-month jump in 29 years. The total of unemployed people tumbled by 456,000.
The total labor force grew by 418,000, possibly accounting for the relatively modest net level of job growth compared to the total employed. The labor force participation rate, which reflects those working as well as looking for work, edged higher to 63.6 percent but remained around 30-year lows.
“You have to be careful, particularly about components of the household numbers that are highly volatile,” said Liz Ann Sonders, chief investment strategist at Charles Schwab in San Francisco. “It’s been our view that we would see a slow but consistent improvement in the jobs picture. I’m not sure this changes that view much at all.”
Economists were expecting 113,000 more jobs and the rate to rise to 8.2 percent. Last month saw 142,000 new jobs as the rate dropped from 8.3 percent in July.
However, those numbers were revised higher, with the Labor Department putting July’s number at 181,000 from the previously reported 141,000 and August up from an originally reported 96,000.
The level of part-time workers reported the largest jump for the month, gaining 582,000.
Jack Welch, the former CEO of General Electric caused a stir after the numbers were released, tweeting “Unbelievable jobs numbers…these Chicago guys will do anything…can’t debate so change numbers.”
The administration rejected the charge that it was manipulating data.
“I have the highest regard for our professionals that do the calculations at the” Bureau of Labor Statistics, Labor Secretary Hilda Solis told CNBC. “They are highly skilled economists, trained in this area.”
Still Solis acknowledged that “we still need to do more” in terms of job creation.
The U-6 unemployment number, which accounts for the underemployed and those who have given up looking for jobs, held steady at 14.7 percent.
“With a gain of 114,000 jobs in September and an upward revision for August, this economy remains on a slow but not slowing growth path,” said Kathy Bostjancic, director of macroeconomic analysis at The Conference Board. “Right now, slow job and income growth is about all the economy is capable of generating as businesses remain focused on cutting costs.”
With President Obama trying to stave off a challenge from Republican Mitt Romney, the state of the economy remains the critical point. Friday’s report underscored how slowly the jobs market is recovering from the depths of the 2008 financial crisis and likely will stoke increased debate amid the halting gains the latest numbers indicate.
While the headline unemployment rate number likely will be something the president touts on the campaign trail, few on Wall Street expected it to be a game-changer relative to the overall jobs picture.
“When you look at the payrolls numbers, they are bumping along where we have been around this 100,000 level, which is not enough to consistently reduce the unemployment rate,” said Lee Ferridge, head of macro strategy for North America at State Street Global Markets. “The overall message is one of plodding along. It’s OK, it’s not disastrous, but it’s nowhere near where the Fed wants it to be.”
Wall Street reacted positively to the report, with the stock market futures modestly higher after the report.
Health care added the most jobs, with 44,000, while transportation and warehousing grew 17,000. Financial services added 13,000 as well and leisure and hospitality, a cornerstore of the jog gains for the past two and a half years, rose a more modest 11,000.
The greatest losses came in manufacturing, which fell 16,000.
The closely watched average work week metric edged higher to 34.5 hours while average hourly earnings increased seven cents to $19.81.
Labor’s birth-death model, which estimates jobs created and lost through newly opened and closed businesses, impacted the September numbers little, actually showing a decline of 9,000.
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