U.S. employers added 248,000 jobs in September, a burst of hiring that helped drive down the unemployment rate to 5.9 percent, the lowest since July 2008.
Friday’s Labor Department report also showed that employers added a combined 69,000 more jobs in July and August than the government had previously estimated.
The unemployment rate fell from 6.1 percent in August and is now close to 5.5 percent, which many economists consider a healthy level. The lower rate, combined with the surge in hiring, could ratchet up pressure on the Federal Reserve to raise its benchmark interest rate earlier than expected. Most economists have predicted that the Fed would start raising rates in mid-2015.
The improved figures come after President Barack Obama touted his administration’s economic achievements in a speech Thursday. The economy is the top issue in voters’ minds as the November elections near.
The number of unemployed fell in September by 329,000 to 9.3 million. Most of them found jobs. But nearly 100,000 stopped looking for work. Their exodus lowered the percentage of Americans working or looking for work to 62.7 percent, the lowest proportion since February 1978.
The job gains were broad-based and included many higher-paying industries. Professional and business services, which includes engineers, accountants and architects, added 81,000 jobs, the most in seven months. Construction companies added 16,000 jobs, manufacturing 4,000.
Friday’s report will likely intensify debate among Fed policymakers over how close the job market is to full health. Fed Chair Janet Yellen has said she is tracking many other gauges besides the unemployment rate, most of which still show scars from the Great Recession.
For example, there were 7.1 million people working part-time jobs last month even though they would prefer full-time work. That figure is up from just 4.6 million before the recession.
And there are 3 million people who have been out of work for more than six months. That figure has declined steadily in the past three years but is still more than double its pre-recession total.
A broader measure of unemployment that includes part-time workers who would prefer full-time jobs, as well as those who have stopped searching, fell to 11.8 percent last month from 12 percent in August.
September’s job gain means that more Americans are earning paychecks and can spend more. The annual pace of economic growth is expected to remain above 3 percent for the rest of the year. Business investment is picking up, and consumer spending is growing at a steady, if modest, pace.
Joseph LaVorgna, an economist at Deutsche Bank, notes that productivity – the amount of output per hour of work – is rising 1 percent annually. LaVorgna thinks that the economy is expanding at a 3 percent annual pace, and that hiring should grow roughly 2 percent a year. That would translate into 230,000 jobs each month, he calculates.
Just 287,000 people sought unemployment benefits in the week before last, not far from a seven-year low reached in July. The number of people receiving benefits has reached an eight-year low, a sign that companies are confident enough in their customer demand to retain their staff levels.
Business investment in equipment and buildings rose 9.7 percent in the second quarter, the second-highest figure in the past three years. And orders for capital goods, a sign of future business spending, rose in August.
Americans have generally spent cautiously this year, held back by sluggish wage growth. Average hourly pay has barely kept up with inflation in the past three years.
But Americans spent more in August. When adjusted for inflation, spending that month rose at the fastest pace in six months.
Still, there are weak spots. Home sales slipped in August as investors cut back on their purchases, and higher prices have made homes less affordable, particularly for first-time buyers who face tighter credit standards.
Fewer Americans signed contracts to buy homes in August, the National Association of Realtors said last week. That suggests that home sales could slip again in coming months.