The unemployment rate (red line) fell to its lowest level since January 2009, when President Barack Obama took office.
UPDATED 9:50 a.m. EDT: The nation's unemployment rate dropped to the lowest it has been in almost four years in September, giving President Barack Obama a potential upbeat talking point as the presidential race heads into the final innings.
The Labor Department reported Friday that the unemployment rate fell to 7.8 percent in September, a decline of 0.3 percentage point and the lowest since January 2009. The government said the economy created 114,000 jobs, about as expected, and generated 86,000 more jobs in July and August than first estimated.
A survey of households from which the jobless rate is derived showed 873,000 job gains last month, the most since June 1983. The drop in unemployment came even as Americans come back into the labor force to resume the hunt for work. The workforce had shrunk in the prior two months. The household survey is volatile, however.
It was the second last report before the November 6 election that pits Obama against Republican Mitt Romney.
"It's a little confusing, to be honest with you. The number of jobs created wasn't that high but the unemployment rate came down and the participation rate went up a little bit, so it's confusing. All in all, it doesn't change the trajectory of what the jobs environment has been really for the last year," said Ron Florance, managing director for investment strategy for Wells Fargo Private Bank.
The two numbers – the unemployment rate and the non-farm payrolls number – come from two separate reports done by the Bureau of Labor Statistics.
The unemployment report is based on the so-called Household Survey and it measures the number of unemployed as a percentage of the labor force. It is notoriously volatile and economists don’t put much stock in it, even though it often becomes the talking point for non-economists, politicians and pundits. It includes the unemployed who are out there actively seeking work and it excludes people who have left the work force and are not applying for jobs.
The non-farm payrolls number comes from the establishment survey and is considered more accurate.
“The rule of thumb when the two surveys tell different stories is to go with what the establishment survey says. However, the household survey provides reasons to be somewhat more optimistic about job opportunities for American workers,” said Heidi Shierholz, an economist for the liberal-leaning Economic Policy Institute.
A Reuters/Ipsos poll released on Thursday after Wednesday's first presidential debate showed Romney gained ground and is now viewed positively by 51 percent of voters. Obama's favorability rating remained unchanged at 56 percent.
Economists blame the so-called fiscal cliff for the slowdown in business hiring, which has left millions of Americans working either part-time or unemployed and too discouraged to look for jobs.
The Congressional Budget Office has warned that a failure by Congress to avoid the automatic tax hikes and government spending cuts that will suck about $600 billion out of the economy next year would knock the economy back into recession.
"Businesses are not hiring people, they want to wait and see how the election evolves and how the political landscape shapes up," said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo, California.
"Everyone has kind of battened down the hatches," Sohn said before the release of the report.
Persistently poor labor market conditions led the Federal Reserve in September to announce a plan to buy $40 billion worth of mortgage-backed securities each month until it sees a sustained turnaround in employment.
The central bank, which also pledged to keep overnight lending rates near zero until at least mid-2015, hopes the purchases drive down long-term borrowing costs and spur the recovery.
The Fed's ultra-easy stance has started to free up credit, giving a lift to consumers, economists said. That, in turn, helped lift retail hiring in September.
Temporary help jobs, which are often seen as a harbinger for permanent hiring, fell 2,000 after being almost flat in August.
Manufacturing payrolls fell for a second straight month.
Construction employment rose 5,000, benefiting from the rise in home construction, as demand for housing rises against the backdrop of record low mortgage rates
Government payrolls rose 10,000 after increasing 45,000 in August. Average hourly earnings rose 7 cents last month, which could support spending.
Reuters contributed to this report.
The Morning Joe panel continues their discussion about the latest jobs report and argue about whether it's accurate. They also consider a tweet from fmr. GE CEO Jack Welch about the jobs numbers. MSNBCs's Joe Scarborough comments saying, "these numbers just don't add up."