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Hurricanes drive September job figures down


The U.S. jobs market lost ground in September in the wake of hurricanes Irma and Harvey, which slammed the Gulf Coast region and Southeast Texas within two weeks of each other, the U.S. Department of Labor reported.

The net number of nonfarm jobs fell by 33,000, a figure that bucks recent employment-growth trends. Labor officials noted a significant drop in food-service and hospitality workers (down 105,000 jobs), many of whom faced job interruptions in the wake of the storms in late August and early September.

usjobsreportManufacturing also declined (down 1,000 jobs), and several industries saw lower-than-normal job additions. Again, this was likely due to the hurricanes, the Labor Department said.

Fannie Mae Chief Economist Doug Duncan said the data doesn’t give a clear picture of trends. It is unlikely to influence the Federal Reserve, which is expected to raise interest rates in December, he said. One unsettling number was that job gains in July were also revised downward to 138,000, from an original estimate of 189,000 gains. July employment was not affected by storms. Other data for September was strong, however.

The unemployment rate fell by 20 basis points to 4.2 percent in September, and the overall number of people classified as unemployed also declined by 331,000 to 6.8 million. Over the last 12 months, an average of 172,000 jobs have been added each month.

“The headline-grabbing 33,000 decline in payrolls from the establishment survey should not come as a surprise,” Duncan said. “The Bureau of Labor Statistics noted that the number of workers who had a job but were not at work due to bad weather jumped to a two-decade high.”

Duncan said the impact of the hurricanes could have skewed the numbers in several ways. For example, a higher-than-normal uptick in wages could have resulted from the fact that lower-paid hospitality and service workers were disproportionately affected by the hurricanes.

Average hourly earnings rose by 12 cents, to $26.55, the Labor Department said. Some economists saw the rise in wages as a big positive, however.

“The key statistic in the September jobs report is the fact that wages grew 2.9 percent [over the year],” said Lawrence Yun, chief economist for the National Association of Realtors. “The tightening labor market, with unemployment at 4.2 percent and the number of job openings at high levels, assure more wage gains in the near future.”

Employment in the construction industry was little changed, but some economists believe that the construction industry’s employment numbers will be boosted in the coming months in response to the hurricanes. Yun said the construction workers will likely be drawn away from needed new-home construction projects to respond to the demand in hurricane-affected areas, however.

“Unfortunately, housing shortages will last longer and home prices will no doubt continue to outpace wage growth for the foreseeable future,” Yun said. 

Some sectors seeing job gains included the health care sector (up 23,000); transportation and warehousing (22,000); professional and business services (up 13,000); and the financial industries (up 10,000). 

Another major storm, Tropical Storm Nate, was expected to hammer New Orleans and the Gulf region this weekend. Economists say the impact of these storms on the jobs market tends to only last a few months. 

“Past experience, with the impact of Katrina [in September 2005] suggests that job creation rebounds in disaster-impacted areas within a month or two,” said Mark Fleming, chief economist for First American Corp. 


 

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