(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Martin Hutchinson
NEW YORK, Oct 5 (Reuters Breakingviews) - A surprisingly sharp drop in U.S. unemployment helped President Barack Obama's odds of re-election regain half the ground lost in his debate with challenger Mitt Romney on Wednesday. They now stand at about 70 percent, according to Intrade. But behind the statistical noise, the reality is more of the same - a steady but uninspiring recovery.
The jobless rate fell 0.3 percentage point to 7.8 percent in September. Friday's report was well timed for Obama with the election almost exactly a month away - so much so that Jack Welch, the former General Electric chief executive, took to Twitter to suggest very improbably that the White House had somehow changed the numbers. More likely, it's a blip. Elsewhere in the jobs report, nonfarm employment increased by 114,000 in September and upward adjustments were made to the previous two months. Overall, the United States has added an average of 146,000 jobs each month in 2012 compared with 153,000 in 2011.
That's consistent growth, but not fast enough to remove unemployment from the national conversation any time soon. In the year to September, the jobless rate declined by 0.1 percentage point a month on average. A continuation of that trend would bring a 6 percent unemployment rate - something close to full employment - by March 2014.
However, aside from the fact that last month's number may have been an outlier, the rate is flattered by a low labor participation rate. The ratio of employment to population has increased only to 58.7 percent from 58.4 percent in the past year. At that rate, it would take 14 years to reach the healthier 2007 level of 63 percent. The number of jobs created in 2011 and 2012 also is insufficient to keep up with the expansion of the workforce due to population growth.
The Federal Reserve's bond-buying effort, upped by $40 billion a month in the middle of September, is supposed to improve the environment for job creation. Even if it is helping a bit, it seemingly isn't making a huge difference. Having swollen the central bank's balance sheet to $2.8 trillion and counting, this so-called quantitative easing is looking expensive.
The next U.S. president will have the chance to replace Fed Chairman Ben Bernanke if he doesn't approve. But the bigger jobs question won't go away so easily. For either Obama or Romney, it looks likely to be on the agenda for years.
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- U.S. nonfarm employment increased by 114,000 on a seasonally adjusted basis in September, according to an Oct. 5 report from the Bureau of Labor Statistics, and the unemployment rate fell by 0.3 percentage point to 7.8 percent. July and August job creation figures were revised up by a total of 86,000 jobs, with government employment being revised up by 91,000.
- In September, credit intermediation services gained 3,900 jobs on a seasonally adjusted basis, real estate, rental and leasing services added 8,300 jobs and residential construction gained 1,100 jobs, for a total of 13,300 jobs. In the last twelve months, employment in these three sectors has increased by a total of 84,500 jobs.
- On the Intrade website, the odds of President Barack Obama being re-elected rose above 70 percent on the morning of Oct. 5, up from about 65 percent before the BLS report was released. On Oct. 2, the day before the first presidential debate, the closing probability of Obama's re-election was about 75 percent.
- BLS employment report: - Intrade Obama re-election odds: - Reuters: US jobless rate tumbles to near 4-year low RELATED COLUMNS Dream Team Machine Job blues - and reds
- For previous columns by the author, Reuters customers can click on
(Editing by Richard Beales and Martin Langfield)
((martin.hutchinson@thomsonreuters.com))
Keywords: BREAKINGVIEWS USA/JOBS