An explosion in part-time hiring helped cut the unemployment rate to its lowest since January 2009, while separate payroll data out Friday indicate underlying job market trends are still weak.
The jobless rate fell to 7.8% in September from 8.1% in August, according to the Labor Department's more volatile household survey, which showed employment surged by 873,000. But part-time jobs due to weak economic conditions jumped by 582,000.
A broad underemployment rate that includes involuntary part-time workers was unchanged at 14.7%.
Still, the latest official unemployment data was coupled with an increase in the labor force, unlike in August, when people stopped looking for work and weren't counted.
U.S. stock indexes initially rallied on the jobs report, but reversed to close mostly lower. The 10-year Treasury yield rose.
The headline unemployment drop may give President Obama a political lift, though voters' perceptions of the economy have been solidifying for months.
Labor's payroll survey offered no signs the economy suddenly shifted into higher gear. In fact, upward revisions to July and August mean last month's 114,000 payroll gain was the second straight month of deceleration.
July saw an increase of 181,000. August's 142,000 rise included 45,000 government jobs, the most in years. That could be a statistical blip in education payrolls caused by earlier school years.
More troubling was manufacturing's loss of 16,000 jobs last month, following a drop of 22,000 in August. It was the first back-to-back decline in payrolls since January 2010.
The sector had been a pillar of growth, but weakness in China and Europe put factories in a slump throughout the summer.
The economy still appears to be expanding at a modest pace of about 2%, and the latest jobs data remain in line with that trend, said John Canally, economic strategist at LPL Financial.
"This doesn't change our view of the world," he said. The job situation "is getting better, but it's getting better way too slowly.
The jump in part-time workers might be due in part to the expiration of extended jobless benefits, he noted. It also suggests firms are reluctant to hire full-time workers while U.S. fiscal policy and the global economic outlook are uncertain.
The drop in manufacturing jobs could be related partly to looming Pentagon budget cuts in the so-called fiscal cliff of year-end tax hikes and spending curbs, said Steve Blitz, chief economist at ITG Investment Research.
But recent economic data overall indicate a gradual improving trend, he said. While September payrolls weren't impressive, they come amid rising consumer confidence, auto sales and homebuying.
"These things don't happen if the job picture is getting worse," Blitz said. "It's telling you that things are tilting positive."