Hurricanes cause rare monthly US job loss but rebound likely
WASHINGTON — A pullback in U.S. hiring last month
resulting from Hurricanes Harvey and Irma will likely prove
short-lived, with a resilient job market pointing to gains in the
The unemployment rate fell to a fresh 16-year low of 4.2 percent,
from 4.4 percent, the Labor Department said Friday in its September
jobs report. The proportion of Americans with jobs rose to a nearly
nine-year high. And even long-dormant wage growth showed signs of
The economy lost 33,000 jobs last month — the first monthly loss in
nearly seven years — as the hurricanes closed thousands of
businesses in Texas, Florida and other parts of the Southeast. Yet
hiring is widely expected to rebound in coming months as companies
reopen and bring back workers and construction firms ramp up repair
and renovation work.
Previous natural disasters, such as Hurricane Katrina in 2005, also
inflicted short-term job losses that were followed by intensified
"The labor market remains in good shape," said Gus Faucher, chief
economist at PNC Financial. "The job losses were due to disruptions
from hurricanes, not underlying weakness in the economy."
Outside of hurricane-hit areas, many Americans found work. The
number of people describing themselves as unemployed fell to 6.8
million, the fewest since March 2007, before the Great Recession
That sign of health makes it appear all but certain that the Federal
Reserve will raise its benchmark short-term interest rate in
December. According to data from the CME Group, investors now
foresee an 88 percent chance of a Fed rate hike then.
Fed Chair Janet Yellen has said she expects pay raises to accelerate
as unemployment declines. That, in turn, might lift inflation closer
to the Fed's annual 2 percent target level if companies raised
prices to pay for higher salaries.
Last month's drop was driven by huge losses in restaurants and bars,
which accounted for 105,000 fewer jobs, a sign of the damage to
Florida's tourism industry. Overall, roughly 1.5 million people were
unable to work last month because of the weather, the government
said, the most in 20 years.
Hourly workers who couldn't work because of the storms last month
and missed a paycheck would have been counted as not working in the
government's survey of businesses, thereby lowering September's job
total. That's true even if those employees returned to work after
the storm passed or will return.
The unemployment rate fell because it is calculated with a separate
survey of households. That survey counted people as employed even if
they were temporarily out of work because of the storms. In fact,
the proportion of adults who have jobs rose to 60.4 percent, the
highest since January 2009.
That's a sign that the low unemployment rate is pulling more
Americans off the sidelines and back into the job market. During the
recession and the sluggish recovery that followed, many people gave
up searching for work.
Dan Harmon, chief operating officer of Smoothie King, a 900-store
chain based near New Orleans, said the storms temporarily closed 66
stores in the Houston area and disrupted the company's end-of-summer
hiring. One store was so damaged it still hasn't reopened.
In August and September, the company typically hires new employees
to replace college workers who return to school. But that process
was delayed in Florida and Texas.
"We weren't able to do our normal hiring spree that we usually do
going into the fall," Harmon said.
The storms also disrupted the company's expansion plans. It opened
65 stores nationwide in the July-September quarter. It would have
opened four more, but they were damaged while under construction.
Each Smoothie King employs about 15 hourly workers and two to three
Nationwide, an alternative barometer of the labor force that
includes not only the unemployed but also part-time workers who'd
prefer full-time jobs, fell to 8.3 percent. That's the lowest such
level in over a decade.
Average hourly wages rose a healthy 2.9 percent from 12 months
earlier. That trend was probably inflated by the loss of so many
lower-paid workers in hurricane-hit areas. Higher-paid workers
likely disproportionately boosted the wage figure.
"We think the magnitude of this distortion was quite small and the
underlying wage numbers are indeed firming," said Michael Feroli, an
economist at JPMorgan Chase.
The government on Friday also revised up wage gains in August —
before the hurricanes hit — to a 2.7 percent annual rate, from 2.5
percent. That suggests that pay could be picking up, even excluding
the storms, and encouraging more people to look for work.
More than 11 million people had been employed in the 87 counties in
Texas and Florida that were declared disaster areas, the government
says. That's equal to about 7.7 percent of the nation's workforce.
Puerto Rico and the U.S. Virgin Islands, which were hammered by
Hurricane Maria, aren't included in the national unemployment
report. Their data will be included in the state jobs figures to be
released Oct. 20.
The mostly solid employment numbers come after other signs the
economy is solid. This week, a survey of services firms — covering
restaurants, construction companies, retail stores, banks and others
— found that they expanded in September at their fastest monthly
pace since 2005. That followed a survey of manufacturers, which
found an equally strong gain. Factory activity expanded at the
fastest pace in more than 13 years.
Harvey caused about $76 billion to $87 billion in economic losses,
according to Moody's Analytics, an economic consulting firm. That
would make Harvey the second-worst U.S. natural disaster, after
Hurricane Katrina in 2005.
Irma will likely end up having caused $58 billion to $83 billion in
economic losses. Those estimates include damage to homes and
businesses as well as lost business and economic output.