The unemployment rate for August 2012 dropped to 8.1% from 8.3%, but in this case with declines in both the labor force (-368,000) and the household-survey measure of employment (-119,000)

With labor force participation falling back to a new cycle low of 63.5%, the drop in the unemployment rate should not be reported as good news. Non-farm payrolls increased by only 96,000 in August 2012, the Labor Department said, versus expectations of 125,000 jobs or more. The manufacturing sector lost 15,000 jobs. The labor participation rate is now at its lowest level since September 1981. If the labor force participation rate was the same as when Obama took office in January 2009, the unemployment rate would be 11.2%. The Labor Department also said that 41,000 fewer jobs were created in June and July of 2012 than previously reported. The broader U-6 unemployment rate, which includes part-time workers who want full-time work, is at 14.7%.