Drop in Jobless Figure Gives Jolt to Race for President

The jobless rate abruptly dropped in September to its lowest level since the month President Obama took office, indicating a steadier recovery than previously thought and delivering another jolt to the presidential campaign.

The improvement lent ballast to Mr. Obama’s case that the economy is on the mend and threatened the central argument of Mitt Romney’s candidacy, that Mr. Obama’s failed stewardship is reason enough to replace him.

Employers added a modest 114,000 jobs last month, the Labor Department reported on Friday, but estimates for what had been disappointing gains in July and August were revised upward to more respectable levels.

Unemployment fell to 7.8 percent from 8.1 percent, crossing what had become a symbolic threshold in the campaign. Mr. Romney was deprived of a favorite line of attack, mocking the president for “43 straight months with unemployment above 8 percent.”

The new numbers may have less economic than political import, since they represent only one month of data that can be quite volatile and give little indication that the plodding recovery has accelerated.

“We’ve been amazingly resilient thus far in the face of all these headwinds,” said Ellen Zentner, the senior United States economist for Nomura Securities International, referring to global obstacles like the slowdown in China and domestic ones like the looming expiration of tax breaks. “But it’s awfully hard to see getting significantly above that growth range given that these headwinds are still in place.”

Still, an energized Mr. Obama seized on the statistics as he campaigned in Virginia and Ohio, seeking to regain his footing after a listless performance in the first debate this week. Mr. Romney, whose muscular showing in Denver had emboldened his campaign, scrambled to play down the report, saying it merely confirmed that millions of Americans had given up looking for work.

 In back-to-back rallies in Virginia, the president declared, “This country has come too far to turn back.” His Republican challenger then insisted, “We don’t have to stay on the path we’ve been on. We can do better.”

Some Romney backers, led by the former chief executive of General Electric, John F. Welch Jr., suggested that the White House had massaged the Labor Department data to make it more favorable. The Obama administration, economic experts and some Republicans dismissed that notion as a groundless conspiracy theory.

The jobs report was preceded by other signs of growing economic strength, including a jump in consumer confidence, the strongest auto sales in four years, rallying stock prices and, at long last, a stabilization of housing prices.

According to the monthly survey of employers, the bulk of the gains came from service jobs, particularly in education and health care. Though government downsizing has been a drag on the recovery, government over all added 10,000 jobs in September, the third consecutive month of gains.

The nation’s employers have added an average of 146,000 jobs a month in 2012, just ahead of the numbers that are considered necessary to absorb new workers into the labor force. “This is not what a real recovery looks like,” Mr. Romney said in a statement.

Areas of weakness included manufacturing, one of the bright spots that Mr. Obama has showcased throughout the re-election campaign. It lost 16,000 jobs after a revised 22,000 drop in August in the face of a global slowdown. The number of temporary jobs, usually considered a harbinger of future growth, fell 2,000. Speaking to a rain-soaked crowd of 9,000 at Cleveland State University, Mr. Obama said, “Today’s news should give us some encouragement. It shouldn’t be an excuse for the other side to talk down the economy just to try to score some political points.”

“We’ve made too much progress to return to the policies that led to this crisis in the first place,” the president said to cheers.

The nation now has nearly the same number of jobs as when Mr. Obama took office in January 2009. Since the economy stopped hemorrhaging jobs in February 2010, there has been an increase of more than 4.3 million. A mere 61,000-job increase would allow Mr. Obama to claim a net gain in jobs over his tenure.

The White House has already made that claim based on one measurement. In an annual recalibration last month, the Bureau of Labor Statistics said 400,000 more jobs were added in the 12 months that ended in March than previously thought. Such revisions are common, but the adjustment process is slow — that new benchmark will not be incorporated into the monthly jobs figures until early next year.

Mr. Romney, on other hand, said the lower rate spoke to a nation short of hope. The rate, he asserted, would be about 11 percent if the same percentage of people were looking for work now as on the day Mr. Obama was elected.

“If you just dropped out of the labor force, if you just give up and say, ‘Look, I can’t go back to work, I’m just going to stay home,’ if you just drop out altogether, why, you’re no longer part of the employment statistics, so it looks like unemployment is getting better,” Mr. Romney said at a farm equipment dealership in Abingdon, Va.

That was true in August, when the rate dropped to 8.1 percent, from 8.3 percent. But this time, the statistics showed that more people were working, not that discouraged job seekers had stopped looking for work.

The jobs report is based on two surveys, one of businesses and one of households, that can present different pictures.

While the survey of businesses showed mediocre growth, the household survey had a whopping increase of 873,000 people working in September. The household survey is much more volatile and prone to sampling error, but it captures aspects of the labor market that the business survey does not, like self-employment and household workers. Economists said that this month’s household survey probably overstated the improvement, but that its credibility was bolstered by an unexpectedly robust rise in consumer confidence.

The polling firm Gallup pinpointed the improvement in consumer confidence last month to the first day of the Democratic National Convention and attributed it almost entirely to increased optimism among Democrats, while confidence among Republicans remained at low levels. But Gallup could not say whether politics or economic conditions had driven the change.

The employment gains were not spread equally. While for older workers, the unemployment rate was the lowest in years, the unemployment rate for black men improved only 0.1 percentage point and the portion of all black men with jobs actually fell, to 57.5 percent.

There was no movement between August and September in a broader measure of underemployment, which includes the jobless who have stopped looking for work and those who work part time but would like to work full time. That stayed at 14.7 percent, though it is down from 16.4 percent a year earlier.

And 4.8 million people are in the group that has had the toughest time finding work — those who have been unemployed for longer than six months.

Sarah Thurman, a civil engineer in Kansas City, Mo., has been looking since May 2010. “The smaller firms are starting to post job openings, and that hasn’t been like that for over two years, but there’s so many of us without jobs that there’s so much competition,” she said. “I’m hearing from the headhunters that it’s going to be opening up, it’s going to be opening up — but when?”

Like Republicans and Democrats, consumers and businesses have divergent views of the economic situation. Consumers have brightened along with the better outlook for employment, calmer stock markets and whispers of rising home values.

Business leaders have been hanging back, more focused on a global slowdown and domestic concerns. They say they are uncertain what the election will mean for the business climate and are waiting in part for a resolution of the host of tax increases and budget cuts that will be set off at the end of the year if Congress fails to act.

The discrepancy between consumers’ mood and companies’ outlook can be easily explained, economists said. “Businesses are much more forward-looking,” said Ms. Zentner at Nomura.

In a survey of 400 chief financial officers conducted this summer, Grant Thornton, a management consulting firm, found that only 37 percent foresaw the possibility of adding workers while 18 percent said they expected to shrink over the next six months.

Harry Kazazian, the chief executive of Exxel Outdoors, a maker of camping equipment based in Alabama, said the election, the fiscal cliff and rapidly shifting regulations had put him in a cautious mood.

With sales on the rise, Exxel has slowly resumed a capital investment plan that it suspended three years ago. “We’re moving forward, but we’re doing it in steps rather than being much more aggressive and putting ourselves out there,” Mr. Kazazian said. “I wouldn’t be surprised if things start turning the other way, meaning down.”

But at a Walmart in Atlanta, shoppers were loosening the reins a bit, buying what they described as small indulgences like scented candle oil and seasonal beer.

Michael Peacock, 43, said that although his house was in foreclosure, he could sense enough activity in his chosen field, online marketing, that he could afford to turn down some work outside his specialty. “I’m not superconfident in the economy. But in my line of work, things have been getting better. There seems to be some improvement.”

John H. Cushman Jr. contributed reporting.

This article has been revised to reflect the following correction:

Correction: October 5, 2012

An earlier version of this article misstated the increase in jobs since February 2010 and the number of jobs needed for President Obama to claim an increase during his tenure. More than 4.3 million jobs have been added since February 2010, not more than 400,000, and an increase of 61,000 jobs, not 62,000, would allow Mr. Obama to claim a net gain. The earlier version also misidentified the city where Sarah Furman lives. She lives in Kansas City, Mo., not Kansas City, Kan.