Unemployment rate drops to surprising 7.8% in September
BY FRANCINE KNOWLES Business Reporter firstname.lastname@example.org October 5, 2012 7:26AM
Job seekers attend job fair, featuring 63 companies, at the Park Ridge Community Center. The fair is sponsored by State Senator Dan Kotowski. | Al Podgorski~Chicago Sun-Times
Updated: October 5, 2012 3:10PM
The U.S unemployment rate dropped to 7.8 percent last month from 8.1 percent in August, falling below 8 percent for the first time in nearly four years as employers added 114,000, surpassing economists’ expectations.
Economists had expected the rate to edge up to 8.2 percent and for the economy to add 111,000 jobs.
The report also showed that employers added 86,000 more jobs in July and August than originally thought.
The number of unemployed people decreased by 456,000 in September to 12.1 million, according to the report, the fewest since 2009. The total number of employed rose by 873,000, following thee months of little change.
Those are “the kind of things you wish for in a recovery,” said Mesirow Financial Chief Economist Diane Swonk.
“It’s a positive report,” said John Challenger, chief executive officer of Chicago-based outplacement firm Challenger, Gray & Christmas, who stressed the unemployment rate dropped because more people found work, unlike in some past reports when it dropped due to people giving up looking for work.
The payroll numbers showing 114,000 jobs created “were not stunning,” Swonk said, but combined with the upward revisions in July and August, “that’s some good news” because there also could be under-reporting in this report as well, she noted.
Swonk cautioned, however, that “one month does not a trend make. What we’re looking for is to see more consistent gains of this nature where both the number of employed are picking up, the number of unemployed are falling and that actually people are throwing their hat in the ring to show that they’ve got some optimism to be willing to participate in this labor market.”
Among other positive news in the report, the number of discouraged workers fell by 235,000 from a year earlier to 802,000.
“That’s the best we’ve seen in a long, long time,” and if the trend continues it’s also “consistent with an improving economy,” Swonk added.
The report showed health care added 44,000 jobs in September, transportation and warehousing added 17,000 and financial activities added 13,000. Manufacturing employment fell by 16,000.
Many of the jobs the economy added last month were part time. The number of people with part-time jobs who wanted full-time work rose 7.5 percent to 8.6 million, the most since February 2009.
But overall, Friday’s report dispelled some fears about the job market. Average hourly earnings rose by 7 cents to $23.58. Over the past 12 months, earnings have risen 1.8 percent. The average work week edged up 0.1 hour.
“Both those would tend to indicate that the job market is a little bit stronger than people think,” said Morningstar Inc. economist Robert Johnson. “If you’re paying more wages and if you’re working the people you’ve got more hours, conditions are good and it’s likely that employment will improve in future months based on those two metrics.”
The report showed a big drop in the unemployment rate for blacks and Asians. Among blacks, it fell to 13.4 percent from 14.1 percent in August, and among Asians, it fell to 4.8 percent from 5.9 percent. Among whites, the rate fell to 7 percent from 7.2 percent. Among Hispanics, it fell to 9.9 percent from 10.2 percent.
Republican presidential candidate Mitt Romney contended the jobs numbers weren’t good enough, “This is not what a real recovery looks like,” he said in a statement, pointing to millions of people still struggling to find work, living in poverty and using food stamps to feed their families.
But the jobs report could help President Barack Obama, who is coming off a disappointing first debate against Romney.
Speaking Friday in Fairfax, Virginia, Obama said the report shows, “We are moving forward again.”
Since bottoming out in February 2010, the economy has added about 4.4 million jobs. Private companies have added more than 5 million, but job gains in the private sector have been blunted by layoffs by state and local governments.
The number of people unemployed for 27 weeks or more stands at 4.8 million, down 189,000 from August.