The unemployment rate fell to 7.8% in a surprising decline that matches the lowest unemployment rate since January 2009 and the first time it has dropped below 8% since President Barack Obama took office.
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Non-farm payrolls increased 114,000 in September after August numbers were revised to 142,000, still more than originally estimated. The median estimate by analysts for September job growth was 115,000.
Hourly wages also rose beyond forecasts. Higher earnings boost consumer spending, a major driver of the economy.
This is the penultimate jobs report before the election and shows the labor market is strengthening.
The unemployment rate is calculated based on households and was predicted to rise from 8.1% to 8.2%.
Private payrolls, which exclude government jobs, rose 104,000, missing the estimate of 130,000 new jobs. Employment at private service providers increased 114,000 and government payrolls increased by 10,000 after jumping by 45,000 in August.
The economy seems to be regaining the momentum it had at the beginning of 2012. Fed chairman Ben Bernanke said the Fed is looking for sustained improvement in the job market, noting that has not been the case in the previous six months.
The improved report is a shot in the arm after the Fed announced a third quantitative easing on September 13.