An Encouraging Unemployment Release, What Does it Mean?

In the first jobs report since QE3 was announced, the most recent jobs report was released Friday morning and showed that the unemployment rate had dropped from 8.1 percent in August to 7.8 percent in September.

Since January there has been an average of 146,000 jobs created by the economy each month and according to the U.S. Department of Labor, 114,000 jobs were added in September. The Labor Department had revised its estimation of jobs created in August, initially estimated at 96,000 is now modified to 142,000.

The 7.8 percent unemployment rate is below the 8.2 percent rate that was forecasted. Also, the 114,000 jobs added are higher than the 111,000 jobs employers were expected to add.

While many may be shocked to hear that the unemployment rate was actually lower than in August, the 8.2 percent that was expected was only estimation and should be treated as such.

Economists use many different factors in determining these numbers, but it can be very difficult to predict the hiring tendencies of an entire nation.

It is also important to remember that while the statistics for the employment rates are posted all over the media world, these figures come from a household survey which means they are volatile and estimates that are open to error.

While a reduction in the unemployment rate should not be taken lightly, many of these new jobs are temporary positions.

While the unemployment rate has fallen to 7.8 percent, the U6 rate, which is considered a broader measure of unemployment, records the total unemployed plus all marginally attached workers and total employed part time for economic reasons, did not change from last month and held steady at 14.7 percent.

Total employment rose by 873,000 in September, the largest one-month increase in 29 years, but almost 600,000 of these positions were for part-time jobs according to the government's household survey.

A large increase in part time jobs in September has shown precedent over the last two years. In 2010 part-time jobs increased by 579,000 and in 2011, there was an increase of 483,000.

The large increase in part-time workers could simply be due to seasonal hiring.

Even with the decrease in the unemployment rate shown in September, the overall trend for the employment-population ratio for 2012 has been rather flat.

The employment-population ratio has increased to 58.7 percent, up by 0.4 percent, after decreasing over the past 2 months.

The length of the average work week rose slightly and the average hourly earnings rose by seven cents over the last month, which are both signs of strength and could potentially support spending.

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