With just a month before the presidential election, the U.S. unemployment rate unexpectedly fell to 7.8 percent in September, dipping below 8 percent for the first time since January 2009.
The economy added 114,000 jobs last month, not a remarkable number and just a bit better than forecast, the Labor Department said.
The government also revised upward employment estimates for July and August, saying that 86,000 more jobs were added in those months than initially estimated.
While the latest numbers "strongly suggest the labor market continues to improve, the world hasn't changed as much as the data suggests," said Mark Zandi, chief economist at Moody's Analytics.
"The decline in the unemployment rate overstates the improvement in the labor market," he said. "There was a big increase in employment related to part-timers, who are working part-time because of economic reasons. They couldn't find a full-time job.
"It's more statistical than real," Zandi said. "The number of part-timers will drop again in October, and [the unemployment rate] will almost assuredly rise back closer to 8 percent."
Private payrolls added 104,000 jobs, while government payrolls added 10,000. It represented the first quarterly increase in government employment since the second quarter of 2010, Jan Eberly, U.S. Treasury assistant secretary for economic policy, said at a briefing in Washington.
"Despite this progress, the high level of joblessness obviously remains a serious concern," she said. Nearly 12.1 million Americans were out of work in September and an additional 11 million were "underemployed in some way," Eberly said.
"The share of the unemployed out of work for more than six months still remains extremely elevated at 40.1 percent in September."
One of the hardest-hit sectors has been education, with 230,000 local education jobs lost since August 2008.
The average workweek in private-sector jobs lengthened slightly to 34.5 hours. Wages rose 0.8 percent in September, and 1.8 percent over the last year, the report noted.
The unemployment rate fell by 0.3 percentage point, from 8.1 percent in August. It was the 31st straight month of private-sector job growth, the Labor Department said.
"The report is highly significant politically because it sent the unemployment rate back down to 7.8 percent, the same as in January 2009, when President Obama took office," said Nigel Gault, chief U.S. economist for IHS Global Insight.
"The report is less significant economically," he said. "It still shows huge slack in the labor market, and it still shows a slow underlying pace of job creation."
In February 2010, there were 4.3 million more unemployed than when Obama became president. Since that time, job growth has reduced that to 61,000 people - meaning unemployment is just about flat to January 2009, when President Obama took office, according to the Bureau of Labor Statistics.
"So we've come full circle with unemployment," Zandi said, adding, "you could argue that a lot of people stepped out of the workforce because they are discouraged. Gov. Romney is making that point. He is overstating the point, but it is a valid one.
"Some people are no longer looking for work. They are discouraged and therefore they are not counted as unemployed. If you put them back in the mix, we probably haven't gone all the way back."
Economist Joel L. Naroff said the next-to-last monthly report before Election Day was filled with surprises. "The labor market is in better shape than many believed, no matter what the politicians may say."
In September, the household survey of people who said they found work rose 873,000, after three months of little change.
The largest increases were in health care, which added 44,000 jobs. Transportation and warehousing payrolls rose by 17,000. Financial services and professional and business services each added 13,000 jobs. Construction payrolls increased by 5,000.
The number of people with part-time jobs who wanted full-time work rose from 8 million in August to 8.6 million in September.
Manufacturing jobs fell by 16,000. The decline was spread across industries, including computer and electronics, printing and automotive.
Although the unemployment rate fell, the so-called under-employment rate - part-time workers who would prefer full-time jobs and people who want to work but have given up looking - held at 14.7 percent, IHS' Gault noted. "There was a sharp increase in people who want full-time work but couldn't find it."
The tepid economy, Europe's economic crisis, and the so-called fiscal cliff, a combination of tax increases and government spending cuts that will take place next year if Congress does not act, has caused companies to hold back on hiring and spending.
"Undoubtedly, there will be some who say the drop was politically manipulated. Hogwash," said Naroff, president and chief economist at Naroff Economic Advisors Inc. "It is actually not that unusual for the rate to move by 0.3 percentage point in a month.
"From May 2008 to April 2009, the rate changed by that amount or more seven of the 12 months," Naroff said. "The last time it happened was 20 months ago, so we were overdue."