Unemployment Rate Falls To 7.8 Percent With A Mere 114,000 New Jobs Added:
Here was our prediction about the September 2012 non-farm payrolls report. We believed the unemployment rate could shift lower and expected an increase of 100,000 jobs +-25,000. (Monthly unemployment numbers have large standard errors.)
“Labor participation rates will be key to the new unemployment report. After hitting the lowest level in 30 months in August, the calculations could turn the jobs number into a positive spinning tool for the Democrats if the nominal rate hits below 8 percent and is close to the 7.8 that President Obama inherited.” Stocks Rangebound Ahead Of Earnings And Jobs Report September 2012
The jobs number came in at 114,000 for the month of September 2012 and as predicted, due to some number crunching, the unemployment rate fell exactly to 7.8 which was the level President Obama inherited. Some commentators immediately cried foul and went as far as to say the cause of the number was due to President Obama’s lack of debating skill on Wednesday night. Regardless, the 43 consecutive months of unemployment above 8 percent or more has finally ended, unless the number is revised up next month. Jobs growth needs to occur at 150,000 to 160,000 just to keep up with population growth each month so some people are puzzled by how the unemployment rate fell from 8.3 to 7.8 percent in 2 months with only a total of 210,000 new jobs added.
See our analysis of how this could impact the elections this weekend.
Markets fell on the news and the Romney Rally may have subsided somewhat due to expectations that the unemployment number could help President Obama’s reelection chances. The Dow retreated significantly from an early gain and turned negative. We are neutral in the short term and have lowered our exposure after taking advantage of the buying opportunity last week.