US unemployment rate drops to near 4-year low of 7.8pc

PUBLISHED : Saturday, 06 October, 2012, 12:00am
UPDATED : Saturday, 06 October, 2012, 10:05am

The US unemployment rate dropped to a near four-year low of 7.8 per cent in September, a potential boost to President Barack Obama's re-election bid.

The Labour Department's fresh numbers for September showed only 114,000 jobs were generated last month, but revisions to July and August data helped cut the overall rate from the previous 8.1 per cent.

The 7.8 per cent level was the lowest since Obama entered the White House in January 2009.

"This morning, we found out that the unemployment rate has fallen to its lowest level since I took office," Obama said during a campaign speech in Fairfax, in the state of Virginia. "It is a reminder that this country has come too far to turn back now."

No president has been re-elected with unemployment above 8 per cent since the Great Depression. The final monthly jobs report before the election will come just days before the November 6 poll.

The report also had the potential to swing momentum back to Obama after his weak showing in the first of three television debates on Wednesday.

Republican candidate Mitt Romney said shortly after the jobs report that 7.8 unemployment "is not what a real recovery looks like".

"If not for all the people who have simply dropped out of the labour force, the real unemployment rate would be closer to 11 per cent," he said.

The surprisingly positive report was greeted with scepticism by some, and Labour Secretary Hilda Solis found herself defending her work against suspicions that the administration might have skewed the jobs numbers. "I'm insulted when I hear that because we have a very professional civil service," Solis told CNBC.

The Dow Jones industrials index climbed to its highest level in nearly five years in early trade.

Associated Press, Reuters, Agence France-Presse