U.S. jobless rate tumbles to near four-year low

Fri Oct 5, 2012 5:08pm EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - The U.S. unemployment rate unexpectedly dropped to 7.8 percent in September and reached its lowest level since President Barack Obama took office, providing a boost to his re-election bid.

The Labor Department said on Friday that employers added 114,000 workers to their payrolls last month, a moderate number, but it said a combined 86,000 more jobs were created in the prior two months than it had previously thought.

Other aspects of the report also were strong. In particular, a separate survey of households found a big surge in hiring. That pushed the jobless rate down by 0.3 percentage point to its lowest level since January 2009.

"It's a good report. The picture is still not a great one, but it's not so bad given the unusual headwinds that we have been faced with," said Ray Stone, an economist at Stone & McCarthy Research Associates in Princeton, New Jersey.

Obama said the report showed the economy was making progress while his Republican challenger Mitt Romney said the labor market was not healing fast enough.

Businesses have been hesitant to hire out of concern the U.S. recovery could take a hit from a sharp tightening of the federal budget next year, any worsening of the debt crisis in Europe and a slowdown in the global economy.

So far this year, job gains have averaged 146,000 per month, compared with 153,000 per month in 2011.

Economists had expected the unemployment rate to rise to 8.2 percent in September. The drop last month came even as Americans returned to the labor force to resume the hunt for work. The workforce had shrunk in the prior two months.   Continued...

People wait in line to enter a job fair in New York August 15, 2011. REUTERS/Shannon Stapleton