Washington: 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 took office.
But analysts did not see the better news as enough to confirm a rebound in growth or to put a halt to the Federal Reserve’s brand new QE3 stimulus plan, which was justified by the inability to bring the jobless rate below the 8.0 percent level.
The Labor Department’s figures for last month based on its survey of business establishments and government offices showed only 114,000 jobs were generated.
But upward revisions both to July and August’s new jobs numbers, and a broader baseline adjustment last week, boosted the total number of people with jobs sharply higher.
The department’s parallel survey of households, which generates the unemployment rate, echoed but also appeared to exaggerate the jobs increase, showing the jobless rate dropping in one month from 8.1 percent to 7.8 percent.
That was the lowest level since President Barack Obama became president in January 2009, and it 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 by the Federal Reserve, which embarked on a QE3 stimulus program in September mainly because of the persistence of high joblessness.
“The economy has now added private sector jobs for 31 straight months,” said Alan Krueger, chairman of the White House Council of Economic Advisers, adding that “the economy has added a total of 5.2 million private sector jobs during that period.”
However, the details of the data 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 sharp fall in the jobless rate against a very modest amount of jobs created sparked a media furor, with many conservatives, most notably business guru Jack Welch, the former chief executive of industrial conglomerate General Electric, accusing the government of manipulating the data for political gains.
But economists said there was both logic and a measure of regular volatility behind the data.
“While the household survey number may seem abnormally high, it is a highly volatile month-to-month metric,” said Russ Grote of Hamilton Place Strategies.
“With a longer window of six months, we find that the household survey has averaged 157,000 jobs added per month, which is consistent with the establishment survey and other economic forecasts.”
That and other factors, he said, “reflects real job growth rather than a statistical abnormality.”
Even so, economists found the job creation pace still too slow, barely enough to beat the natural growth of the labor supply, and not likely to slow the latest Federal Reserve stimulus program, the open-ended bond-buying operation branded QE3, that aims to encourage investment and hiring by bringing down long-term interest rates.
“The rate of job growth over the last three months is not especially robust,” said Dean Baker at the Center for Economic and Policy Research. “At the current rate it will take more than a decade to reach full employment.”
Nigel Gault, chief US economist at IHS Global Insight added: “the bottom line is that there is still huge slack in the labor market, which is still showing a slow underlying pace of job creation.”