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NEW YORK -- The unemployment rate in September fell from 8.1% to 7.8%, the lowest since January 2009, as Americans benefited from a surge in part-time work, the Labor Department said Friday.
Employers added 114,000 jobs, about what economists expected, with health care and transportation and warehousing leading job gains.
Businesses added 104,000 jobs while federal, state and local governments added 10,000.
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The jobless rate fell sharply because it's calculated from a different survey than the official employment number. That household survey showed a robust 873,000 increase in employment and a 456,000 decline in unemployment.
However, many of those job gains were in part-time and self-employed positions.
The report is the government's next-to-last reading on employment before the presidential election and could influence undecided voters.
One positive sign: the Labor Department revised up estimated job gains for July and August by a total 86,000. July's total rose from 141,000 to 181,000, while August increased from 96,000 to 142,000.
"It's continued improvement at a modest pace," Wells Fargo Chief Economist John Silvia said of the report.
Economists had estimated that employers added 115,000 jobs in September, including 129,000 in the private sector and 14,000 government job losses
There were some other bright spots behind the headline numbers. The average work week rose to 34.5 hours from 34.4 hours. Employers typically boost the hours of existing employees before bringing on new staffers. And average hourly earnings jumped seven cents to $23.58.
Also, the number of Americans out of work at least six months fell by 189,000 to 4.8 million. Yet these long-term unemployed still represent 40% of all of the jobless.
However, another sign of future permanent hiring -- the addition of temporary workers--was less encouraging. Employers cut 2,000 temporary workers.
About two-thirds of the 873,000 increase in household-survey employment was in part-time jobs.
"We have to look at it as a qualified positive," says Patrick O'Keefe, former deputy assistant secretary at Labor and currently director of economic research at J.H. Cohn, an accounting consulting firm.
After the economy added a solid 200,000-plus jobs a month early this year, job growth slowed to an average monthly pace of 97,000 from March through August. Economists partly blame a confluence of scheduled tax hikes and spending cuts at year's end that threaten to push the nation back into recession if a divided Congress can't stave them off.
"Until the fiscal cliff issue is resolved, we're not going to get strong job growth," says Joel Naroff of Naroff Economic Advisors. Businesses, he says, are hesitant to invest and hire when they could be saddled with large tax increases within months.
Companies are also worried about the lingering European debt crisis and recession, which are dampening exports, and rising gasoline prices that are likely to crimp consumer spending. Economic growth, meanwhile, has been running at less than a 2% annual pace this year. IHS Global Insight says it expects 1.5% growth the second half of the year, slightly less than the first half.
Naroff projects average monthly job gains of 125,000 to 150,000 the rest of 2012, barely enough to keep the unemployment rate from rising.
Economic reports this week underscored the halting recovery. First-time jobless benefit claims rose by 4,000 to 367,000. And while surveys showed both manufacturing and service business activity expanding in September, hiring slowed in the service sector -- which makes up 80% of the economy.
Vehicle sales remained strong in September while several recent private and government reports show the long-depressed housing market has started to turn around.
To further spark home sales and the economy, the Federal Reserve last month announced a bold new program to buy $40 billion a month in mortgage-backed securities to further push down interest rates and pump up stocks. The Fed said it would continue the purchases and possibly buy other assets until the job market improves significantly.