WASHINGTON (AP) — The American economy added 80,000 jobs in October, and job growth in the two previous months was much stronger than first thought, an encouraging sign as the nation searches for a way out of the jobs crisis.
The unemployment rate dropped to 9 percent from 9.1 percent, the first time it has fallen since July and the lowest rate since April, the government said Friday.
"Those are pretty good signs," said Michael Hanson, senior economist at Bank of America Merrill Lynch. "We're hanging in there."
Economists surveyed by FactSet, a provider of financial data, had expected a gain of 100,000 jobs. It takes a gain of about 125,000 jobs a month to keep up with population growth, more to bring down the unemployment rate.
The overall jobs figure was the smallest in four months. Still, there were smaller, more encouraging signs in the government's monthly snapshot of unemployment, one of the most closely watched economic reports.
Job gains and losses are reported through a government survey of businesses and other employers. A separate survey of households is used to calculate the unemployment rate, and that survey showed an even brighter picture.
The household survey, the only one that includes farm workers and the self-employed, found a gain of 277,000 jobs in October and an average of more than 300,000 jobs a month since August.
Some economists took heart because they believe the household survey is better than the employer survey at measuring changes in newer and very small companies.
The Labor Department said the economy added 102,000 more jobs in August and September than first thought. And the ranks of the long-term unemployed, people out of a job for at least six months, fell sharply to 5.9 million.
Those signs further ease fears of a new recession, which had loomed over the economy this past summer. Europe is wrestling with a debt crisis, however, and even if it dodges catastrophe, a recession there would be a drag on the U.S. economy.
The job market turned consistently negative in February 2008. The nation lost jobs for 25 months in a row — almost 8.8 million of them in all. Since then, the economy has only recovered 2.3 million jobs.
The unemployment rate has hovered around 9 percent for more than two years, and the Federal Reserve said this week that it will is not expected to fall significantly through the end of next year.
That means President Barack Obama will almost certainly go before voters next November seeking a second term with the highest unemployment of any sitting president since World War II.
Obama, appearing at the G-20 economic summit in Cannes, France, said the U.S. economy is growing "way too slow." He repeated his call for Republicans in Congress to pass his $447 billion jobs bill, a mix of tax cuts and spending on roads and rail lines.
"There's no excuse for inaction," the president said.
Republicans in the Senate on Thursday defeated the infrastructure portion of Obama's proposal. GOP lawmakers opposed the bill's tax surcharge on the wealthy and the additional spending.
Republicans laid blame on Obama and Democrats in Congress.
"At virtually every step of the way, President Obama and Democrats have increased uncertainty," said Rep. Kevin Brady, R-Texas. "This has discouraged businesses from making new investments."
Hiring last month was broad. Professional and business services, which includes the accounting, engineering, and temporary help industries, added 32,000 jobs. Hotels, restaurants, and entertainment companies added 22,000. Health care added 12,000.
The construction sector cut 20,000 jobs for the month, the most since January. That industry is examined closely because a pickup in the housing market could add force to the economic recovery.
Government, meanwhile, cut 24,000 jobs. That's unusual for an economic recovery, when state, local and federal governments typically hire workers. The private sector added 104,000 jobs for the month.
State and local governments have cut 288,000 jobs in the past year. But as the economy recovers and they receive more tax revenue, those layoffs should be limited in the months ahead, said Carl Riccadonna, senior U.S. economist at Deutsche Bank.
The number of discouraged workers — those who have given up looking for work and are no longer counted as unemployed, fell. And fewer people with part-time jobs were looking for full-time work.
"Overall, while this report is not good enough, several key numbers are now moving in the right direction," Ian Shepherdson, an economist at High Frequency told clients. "The odds of significantly better employment reports over the next few months seem to be improving."
The economy grew at an annual rate of 2.5 percent in July, August and September, its best performance in a year. In the first half of this year, the economy expanded at the slowest pace since the Great Recession ended in June 2009.
The stronger economy over the summer was powered by consumer spending, which grew three times as fast as it had this spring. Americans spent more even in the face of fears of a new recession and wild gyrations in the stock market.
Still, companies appear to be waiting for customer demand to pick up even more before they hire again in great numbers. They learned during and after the recession to live with fewer employees.
Worker productivity rose from July through September by the most in a year and a half. More productivity is usually good because companies pay workers more without raising prices. But workers generally are not getting raises this time.
The Federal Reserve this week lowered its forecast from economic growth to 1.7 percent for this year, down from a forecast of 2.7 percent issued over the summer. It also says unemployment will not come down substantially through the end of 2012.
The economy has absorbed a series of body blows this year.
In the spring, the devastating earthquake and tsunami that struck Japan disrupted supplies of cars and other products. The price of gas rose to a national average of almost $4 a gallon.
Then this summer, Washington was seized by gridlock over whether to raise the borrowing limit for the federal government and how best to tackle the nation's long-term debt problem.
More recently, economists have fretted over a debt crisis in Europe. That continent buys 20 percent of American exports, so a slowdown there would take a bite out of the U.S. economy, too.
The Greek prime minister this week called for a surprise popular vote on a European plan to bail out the debt-addled Greek economy. He later backed down, but even if Greece is stabilized, other European economies are weighed down by debt.