The unemployment rate fell below eight percent for the first time in 43 months, according to the federal government September jobs report.
The figures also show a Hispanic unemployment rate that has dropped below 10 percent for the first time since December 2008, before President Obama took office.
How it will affect the campaign
Friday's report comes as welcome news to Obama, whio has struggled to combat stubbornly high unemployment rates and a sluggish economy as he campaigns for reelection.
The numbers also mark a bright spot for the president's reelection campaign at the end of a tough week. Obama's Wednesday night debate performance against Republican challenger Mitt Romney was widely panned for being tired, with most outlets declaring Romney the winner of the evening.
"This morning, we found out that the unemployment rate has fallen to its lowest level since I took office," Obama said during a campaign stop in Fairfax, Va. "More Americans entered the workforce, more people are getting jobs."
Republicans, who have for months on the campaign trail noted the higher-than-eight-percent unemployment rates, still came out swinging following the report.
Presidential nominee Mitt Romney blasted the report, saying the unemployment numbers are down because people have simply stopped searching for jobs.
"This is not what a real recovery looks like," he wrote in a statement. "We created fewer jobs in September than in August, and fewer jobs in August than in July, and we've lost over 600,000 manufacturing jobs since President Obama took office. If not for all the people who have simply dropped out of the labor force, the real unemployment rate would be closer to 11 percent."
Republicans also took to Twitter to criticize the Obama administration, with some going so far as to accuse them of manipulating the numbers.
RNC Chairman Reince Priebus tweeted his support for Romney and said, "President Barack Obama promised unemployment would be below 5.5% by today - after 4 long yrs in office, unemployment's still too high."
Former General Electric CEO Jack Welch drew criticism from the Obama administration for suggesting the figures have been adjusted somehow.
"Unbelievable numbers…these Chicago guys will do anything…can't debate so change numbers," Welch wrote in a tweet shortly after the numbers were released.
Labor Secretary Hilda Solis responded to Welch's comments on CNBC. "It's really ludicrous to hear that kind of statement…I have the highest regard for our professionals that do the calculus."
It's unclear how many voters will be swayed by the newest numbers. Many have already made up their minds, and early voting is already well underway in some states.
Latinos, in particular, have overwhelmingly backed Obama despite higher than average unemployment rates.
While Latinos have been hit particularly hard by the economic downturn, especially the foreclosure crisis, most blame former President George W. Bush, and not Obama, for the state of the economy. According to an August survey by political opinion research firm Latino Decisions, more than two-thirds of Latinos, 68 percent, blame Bush, while only 14 percent blame Obama.
This is not the last major jobs report before the election, but it might be the most influential one. The October report is due out four days before Nov. 6, but the September report will be the last one for early voters, and the number of people still undecided less than a week before the election is likely to be slimmer than it is now.
The bottom line
September's numbers show two things: the job market improved more than expected during the summer but still remains fundamentally weak.
This report marks the first time in a long time that a significant uptick in the number of people leaving the workforce did not drive down the unemployment rate, which is calculated by dividing the number of unemployed by the number of people seeking work. That trend is clearly positive. The size of the labor force actually grew by 418,000 in September, showing that more people are working and looking for work.
The sharper than expected drop in the unemployment rate in September was partly the result of revisions which found that 86,000 more jobs were created in July and August than originally estimated.
But it is important to keep in mind that the 114,000 job increase of September is not enough to keep up with population growth. Ezra Klein of the Washington Post points out that at the current pace, it will take more than a decade to return to full employment. The U.S. economy lost 8.8 million jobs during the Great Recession (2007-09) and less than half, around 4.3 million, have been recovered.
You should also note, as we have in the past, that the figures released on the first Friday or each month are estimations that can be revised up or down in subsequent months. In its annual revision, the Bureau of Labor Statistics found that it had been under-counting the number of new jobs by about 30,000 per month between April 2011 and May 2012.
The trend however points to steady, if slow, improvement.
Who is hiring?
The health care industry has added 295,000 jobs in the past year. In September 44,000 jobs were added in the sector led by job gains in ambulatory health care services (+30,000) and hospitals (+8,000), according to the Bureau of Labor Statistics.
The transportation sector added 17,000 jobs in September while the financial sector added 13,000 jobs. After growing strongly during the past two years manufacturing continues to be stagnant. The sector lost 16,000 jobs in September. Employment in construction, retail trade, leisure and hospitality, and government, showed only little change in September.
At 7.8% the national unemployment rate is at the same level as when President Obama assumed office (the Hispanic rate at 9.9% is now actually lower). Felix Salmon points out that Preisdent Obama can now claim to have "created more private-sector jobs in the past four years than George W Bush created in eight."
Things are moving slowly but continue in the right direction.