Hurricanes Harvey and Irma destroyed hundreds of thousands of homes and resulted in billions of dollars in damage. And according to a new report from the Department of Labor Friday morning, the devastating effects of these two storms aren’t limited to the physical. Non-farm employment in the U.S. declined for the first time in nearly seven years, thanks to job market disruptions from the two hurricanes.
The Bureau of Labor Statistics reported Friday that the U.S. lost 33,000 non-farm jobs in September. The unemployment rate, however, managed to tick down to 4.2% from 4.4%, and the broader unemployment rate (the U-6 figure, often referred to as the “real” unemployment rate because it measures the percent of total unemployed plus people who are marginally attached to the labor force or working part time for economic reasons) dropped to 8.3%, down from 8.6% in August and 9.3% in September 2016.
Economists, meanwhile, were expecting private payrolls to add 80,000 jobs and for the unemployment rate to remain steady at 4.4%.
The 33,000-job decline marks the end of an 83-month streak of job growth that began under President Obama. The BLS said Friday that the overall drop in jobs was driven by “a steep employment decline in food services and drinking places and below-trend growth in some other industries [that] likely reflected the impact of Hurricanes Irma and Harvey.”
Specifically, employment in the hospitality industry (restaurants and other food-and-drink service locations) fell by 105,000 jobs, which the BLS attributed to workers being off payrolls during and immediately after Hurricanes Harvey and Irma. For the purposes of the September report, Hurricane Irma was particularly disruptive: Irma made landfall in Florida on September 10, which was the beginning of the reference period for both the establishment and household surveys conducted by the BLS.
Economists are in broad agreement that the September data is as noisy as it is a bit misleading; “not as bad as it seems” has been a common refrain.
“If you zeroed out leisure and hospitality… we’d have hit around 75,000 to 78,000 gains in payrolls, which is right around what people were expecting,” Josh Wright, chief economist of iCIMS and a former Fed staffer, said in a phone interview Friday morning.
Added Andrew Chamberlain, chief economist at job-searching site Glassdoor: “This job loss is very similar to what we saw following Hurricane Katrina in September 2005. In that month, the original top-line jobs number was minus 35,000… it was later revised to 67,000 positive. The margin of error on jobs report is about 100,000 jobs, so it’s very likely that today’s number will be revised upward in the future.”
JJ Kinahan, TD Ameritrade’s chief market strategist, said Friday that he’s encouraged by metrics like the 23,000 jobs added in the healthcare sector in September and the 13,000 jobs added in the professional and business services sector — areas where Americans can find more than an hourly wage, but a career. ” Where we’ve been creating jobs and careers, we’re still continuing to create jobs and careers,” he said. “I never want to make light of people losing certain types of jobs, but career-type jobs are continuing to grow, and that’s one of the things I think we have to take away from this.”
Wright, Chamberlain and Kinahan also agree that just as the headline number isn’t as bad as it seems, the uptick in average hourly earnings in September isn’t as good as it seems, either. The BLS reported Friday that average hourly earnings for all employees on non-farm payrolls increased by 12 cents in September and by 74 cents, or 2.9%, over the past 12 months. However, just as the 105,000-job loss in food and drink services affected the top-line jobs number, so too did that loss affect how wages moved during the month.
“Average hourly earnings aren’t adjusted for the composition of jobs,” Wright noted, So, the “loss of leisure and hospitality jobs [in September]… beefs up that number.”
As it does every month, the BLS also provided revisions to prior-months’ reports; it said Friday that total nonfarm payroll employment for July was revised down from 189,000-jobs added to 138,000, and August’s figure was revised up from 156,000 jobs added to 169,000. With these revisions, job gains in July and August were 38,000 less than what was previously reported, and over the last three months, gains have averaged 91,000.