U.S. Unemployment Rate Falls To Lowest Level Since 2008

The low level could ratchet up pressure on the Federal Reserve to raise its benchmark interest rate earlier than it plans.

Id 5146 Now Hiring

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.

The Labor Department report Friday also showed that employers added 69,000 more jobs in July and August than the government had previously estimated.

The rate fell from 6.1 percent in August and is now close to 5.5 percent, which many economists consider a healthy level.

That could ratchet up pressure on the Federal Reserve to raise its benchmark interest rate earlier than it plans. Most economists have predicted that the Fed will do so 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 last month. But nearly 100,000 stopped looking for work. That exodus lowered the percentage of Americans working or looking for work to 62.7 percent, the lowest proportion since February 1978.

In August, employers had added just 142,000 jobs after topping 200,000 for six straight months, the longest such stretch since 1997. August's slowdown was attributed in part to temporary factors, such as a walkout by 25,000 workers at Market Basket, a Northeastern grocery store chain. That dispute has since been resolved, and the return of those workers could boost September's job total.

Auto manufacturing jobs had also fallen in August, even though car sales have been strong this year. That has led many economists to forecast a rebound in auto manufacturing jobs in September.

The growth of the economy has been healthy enough that most analysts predict that hiring will remain solid even if one or two months occasionally produce disappointments.

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 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.

LaVorgna also notes that employee tax withholding receipts are growing at a brisk pace, suggesting that companies are stepping up hiring.

And just 287,000 people sought unemployment benefits last week, 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 this week. That suggests that home sales could slip again in coming months.

More in Economy