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Unemployment Slips Below 8% for First Time Since 2009

The nation's unemployment rate fell to 7.8 percent in September├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôthe lowest level since January 2009├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øas the economy added a below-average 114,000 jobs, the ""Bureau of Labor Statistics (BLS)"":http://www.bls.gov/news.release/pdf/empsit.pdf reported Friday.

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The 0.3 percentage point improvement in the unemployment rate is the largest since January 2011, when the unemployment rate dropped from 9.4 percent to 9.1 percent.

Economists expected payrolls to grow by 113,000 and the unemployment rate to rise from 8.1 percent in August to 8.2 percent in September.

Within the household survey, the labor force participation rate (which tracks the labor force as a percentage of all those 16 years or older) rose to 63.6 percent. The employment-population ratio, a broader measure, rose to 58.7 percent, its highest level since May 2010.

While the number of new jobs in September suggests a still sluggish economy, BLS revised upward job growth for both July and August. In July, according to BLS, the nation added 181,000 jobs, up from the previous report of 141,000. August job growth was revised up to 142,000 from the previously reported 96,000.

According to BLS, the number of people considered ""not in the labor force"" fell by 211,000 from August.

The report was good news for President Obama, taking away one of the principal attack lines from Republican presidential nominee Mitt Romney, who frequently noted the unemployment rate was above 8.0 percent and had been for the President's entire tenure.

There will be one more employment report issued before the November 6 election├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôalthough early voting has begun in many states├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôand indeed this more favorable report could produce some not-so-favorable statistics next month.

If, for example, individuals who are out of work and not looking (and are thus not counted in the official definition of ├â┬ó├óÔÇÜ┬¼├àÔÇ£unemployment) re-enter the labor force to seek employment, the unemployment rate would increase. Such an increase would be a positive sign suggesting those individuals have regained confidence but the statistics├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôand headlines├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôshowing a higher unemployment rate would look negative.

Average weekly hours rose in September 34.5 from August├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós 34.4. When the ├â┬ó├óÔÇÜ┬¼├àÔÇ£Great Recession├â┬ó├óÔÇÜ┬¼├é┬Ø began in December 2007, average weekly hours were 34.6. Reducing hours is a tactic cost-conscious employers use to maintain profits while at the same time retaining employees whose skills might wither if they were laid off.

As with most economic reports, there were some pockets of negative news. Not every industry or demographic sector participated in the growth. Manufacturing, for example, shed 16,000 jobs, and the information sector dropped 6,000 jobs. State government payrolls also contracted in September, dropping 7,000 jobs, but overall, governments at all levels added 10,000 jobs.

The number of temporary workers fell 2,000 in September, which could be seen as a suggestion that employers feel confident enough to add permanent rather than temporary staff.

The labor force├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôthe sum of employed and unemployed├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôdropped in September, which helped to lower the unemployment rate. The number of people unemployed fell 456,000, including some who may have dropped out of the labor force, while the number of people employed grew 873,000, the strongest month-to-month gain since January 2003.

The number of multiple job holders dropped in September after increasing in July and August, when it in effect minimized the impact of the new jobs. The drop in multiple job holders means the newly created payroll jobs went to individuals who had been previously unemployed.

The often-cited alternative measure of unemployment, which includes people ├â┬ó├óÔÇÜ┬¼├àÔÇ£marginally attached to the labor force,├â┬ó├óÔÇÜ┬¼├é┬Ø as well as those with part time jobs for economic reasons, was unchanged in September at 14.7 percent but by numbers rose about 60,000.

The education and health sector led job growth, adding 49,000 jobs, followed by transportation and warehousing, which added 17,100 jobs. The financial and professional business services sectors which added 13,000 each.

The teen unemployment rate dropped 0.9 percentage points to 23.7 percent. The unemployment rate for college graduates├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôa demographic segment closely connected to homeownership├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôwas unchanged in September at 4.1 percent.

Despite some encouraging signs in the report, other indicators were disappointing. The average duration of unemployment rose to 39.8 weeks in September from 39.2 weeks in August and 38.3 in July. September's increase was the fourth one in the last five months.

The percentage of individuals unemployed for 27 weeks or more rose to 40.1 percent of all those unemployed. By the numbers, long term unemployment fell to 4.84 million in August from 5.03 million in September.

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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