Employment Picture Brightens in September

By Toni Vranjes

October 5, 2012

The nation’s unemployment rate fell to the lowest level in nearly four years, and the economy added 114,000 jobs last month, the government reported today.

The jobless rate dropped from 8.1 percent to 7.8 percent in September. It’s a major political development for President Obama, because it’s the lowest level of unemployment since he took office in January 2009.

Last month, employment rose in several areas, including health care and transportation. Even the hard-hit public sector showed some gains: total government employment was up by 10,000.

In addition, job growth was revised upward for the previous two months. The government’s revised figures show 142,000 new jobs in August, rather than 96,000. In July, the new numbers show that employers created 181,000 jobs, instead of 141,000.

It’s a jolt of encouraging news, following last month’s downbeat jobs report. However, there are still some areas of concern.

As IHS Global Insight economist Nigel Gault noted in a commentary, the broadest measure of unemployment was unchanged at 14.7 percent. This measure, which is often called the “underemployment rate,” includes people who want full-time work but have had to settle for a part-time schedule. Gault wrote that there was a “sharp increase in involuntary part-time work.” According to the Labor Department, the number of people working part-time for economic reasons increased by nearly 600,000.

Gault points out that interpreting the monthly employment reports can be tricky, because the government reports findings from two separate surveys.

The “payroll survey” — which examines employment by businesses and government agencies — showed 114,000 new jobs. Meanwhile, the “household survey” — which collects data on U.S. households — showed that employment increased by 873,000. The unemployment rate is derived from the household survey.

While the payroll survey likely understated employment growth, the household survey may have overstated it, according to Gault.

President Obama’s chief economist, Alan Krueger, emphasized the encouraging news. On the White House blog, he noted that the labor force grew by 418,000 last month, and that the U.S. economy has added private-sector jobs for 31 consecutive months.

“While there is more work that remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression,” Krueger wrote.

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