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September jobs report: US unemployment rate falls to 7.8 percent

The U.S. unemployment rate fell substantially in September.
The U.S. unemployment rate fell substantially in September.

The most important number in the U.S. economy was released by the Labor Department. The unemployment rate fell to 7.8 percent from 8.1 percent as the country added 115,000 new jobs in September. It's the second-to-last jobs report we're going to get before the election. The October report will hit the Friday before Americans go to the polls.

Apart from the notable drop in the headline rate — it has not been below 8 percent in four years — the number of jobs added for the month was about what economists expected. What's interesting — and encouraging — is that the previous two months saw job growth revised up. July went to 181,000 from 141,000, and August to 142,000 from 96,000. 

That's 87,000 new jobs, over two fairly weak months, that the Bureau of Labor Statistics just discovered. Mind you, these sub-200,000 numbers do not put the country on pace for even a break-even recovery. We're in a holding pattern. And to see the headline number fall faster, we need to add 300,000-400,000 new jobs each month.

There continue to be 12.1 million Americans unemployed, with 40 percent of them counted as "long term unemployed" — out of work for 27 weeks or more.

Still, there's a positive trend here. And why did the unemployment rate dip to 7.8 percent? It looks like about 600,000 more people started working part-time in September. So while the decline in the unemployment rate might initially look like reason for moderate celebration, it needs to be taken with a grain of salt.

Meanwhile another critical number, the labor participation rate, didn't go anywhere in September: 63.6 percent. That's the lowest its been since the early 1980s.

Bottom line: The U.S. jobs market is gaining a little bit of momentum after a few very sluggish months. But it could be a while before we see national unemployment at even 6 percent. 

In Los Angeles, however, we're starting to see hiring pick up. The L.A. unemployment rate is still far higher than the nation's, but it recently dipped to 10.3 percent from 10.9 percent.

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