US jobless rate sinks to 7.8 percent, lowest since Jan 2009

Huge revisions to previous data gave a sharply better picture of the US jobs situation on Friday, pushing the unemployment rate down to 7.8 percent, the lowest level since Barack Obama became president in January 2009. The Labor Department's figures for last month showed only 114,000 jobs were generated, but upward revisions both to July and August new jobs numbers, and a broader baseline adjustment last week, helped reduce the overall jobless rate from the previous 8.1 percent. The 7.8 percent level was the lowest since President Barack Obama took office, and challenged critics, including White House rival Mitt Romney, who said Obama could not make good on his pledge to bring unemployment below 8.0 percent by the end of his first four-year term in office. It was also lower than forecasts for this year of the Federal Reserve, which embarked on a QE3 stimulus program in September mainly because of the persistence of high joblessness. "Today's employment report provides further evidence that the US economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression," said Alan Krueger, chairman of the White House Council of Economic Advisers. "The economy has now added private sector jobs for 31 straight months. Taking account of the preliminary benchmark revision released last week, the economy has added a total of 5.2 million private sector jobs during that period." Revisions to the previous two months' numbers added 86,000 net new jobs to what had been understood, not enough by itself to bring down the overall unemployment rate. But last week the Labor Department did a more far-reaching adjustment to the base labor sector data reaching back several years, helping reduce the total number of unemployed. In addition, the September figures showed a 170,000 increase in the number of people who dropped out of the work force since July. The details were not all positive: manufacturers reduced their job rolls for the second straight month and the average duration that people are going without jobs increased to 39.8 weeks. Moreover, the number of people who could only do part time work increased by 580,000. But in an important shift, the numbers showed that, in addition to the private sector, government bodies at all levels returned to hiring in June and July, albeit at a modest pace, reversing a slow contrary trend since May 2010. Overall, 12.1 million Americans remained officially unemployed, down from 13.9 million in September 2011, when the jobless rate was 9.0 percent. Another 6.7 million were counted as having given up looking for a job but still wanting one, up from 6.2 million a year earlier. The data "points to some gradual improvement on the market that is expected to continue, even though fiscal policy uncertainties and the financial market turbulences linked to the European crisis can weigh on the economic agents' confidence in the months to come," said Inna Mufteeva, US economist at Natixis. The numbers were not expected to slow the latest Federal Reserve stimulus program, an open-ended bond-buying operation branded QE3 that aims to encourage investment and hiring by bringing down long-term interest rates. The Federal Reserve justified the program, announced September 13, primarily as a response to the unemployment rate being stuck between 8.1 percent and 8.3 percent since the beginning of the year. "The rate of job growth over the last three months is not especially robust... at the current rate it will take more than a decade to reach full employment," said Dean Baker at the Center for Economic and Policy Research. "The employment outlook for the remainder of the year remains muted. This mainly reflects businesses' reluctance to hire amid the uncertainty about the global economic outlook and concerns about fiscal policy in the US," said Harm Bandholz of UniCredit.