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Bloomberg
Two major hurricanes knocked down payrolls in September, yet the US labour market is holding up just fine.
That’s the broad message from employment figures released by the Labor Department. Payrolls fell for the first time since 2010, reflecting Hurricane Harvey’s impact on Texas and Irma’s fallout in Florida. At the same time, the unemployment rate dropped to a new 16-year low and labour participation increased, indicating Americans are coming off the sidelines and into work.
The weather effects were clear: The storms helped take out more than 100,000 jobs at restaurants and bars, an industry where most workers only get paid if they show up to work. There were about 1.5 million people unable to work due to bad weather, a 21-year high that compares with a historical September average of about 80,000, Labor Department figures show.
“You have to qualify a lot in this report,†said Michael Feroli, chief US economist at JPMorgan Chase & Co. in New York.
That said, outside of the hurricane effects, the labour market “seems to be still solid.†The drop in unemployment and rise in participation are positive signs, and “we’re still creating more than enough jobs to absorb new entrants. The slack is diminishing.â€
Average hourly earnings jumped from a year earlier by the most since the expansion started in 2009, in part because the storms boosted utility workers’ overtime pay and kept people away from work, especially in low-wage industries such as leisure and hospitality. There was also a calendar quirk that tends to produce stronger wage growth when the 15th of the month falls within the survey week.
Payrolls fell 33k (est. up 80k) after 169k advance; revisions subtracted combined 38k in July-Aug. Unemployment rate, derived from a separate Labor Department survey of households, dropped to 4.2% (est. 4.4%), lowest since Feb. 2001, from 4.4%.
Yet upward revisions to earnings in the two prior months show wage pressures had been building before the hurricanes hit. And as the impact of the storms fades, the economy will get a boost through the rest of this year and into 2018 because of rebuilding efforts, supported by federal aid and insurance payments, said Gus Faucher, chief economist at PNC Financial Services Group Inc. in Pittsburgh.
Labour-force flows data showed the number of Americans not in the labour force a month earlier and found a job in September hit a record high.