Jobs numbers tumble for 1st time in 7 years
The U.S. lost jobs for the first time in seven years last month after hurricanes Irma and Harvey drove down employment. But wages grew, unemployment fell to a new 16year low, and there were other reassuring signs that September’s weak showing was a blip.
Employers shed 33,000 jobs in September — the first decline since September 2010, when the economy was still reeling from the recession’s aftereffects. But unemployment dropped from 4.4 percent to 4.2 percent, the lowest since February 2001, the Labor Department said Friday. So economists are likely to write off the drop, as will Federal Reserve officials, who tentatively plan to raise interest rates late this year as the economy improves.
“Despite the decline (in job gains), it’s really clear that the labor market remains in good shape,” said Joel Naroff of Naroff Economic Advisors.
The unemployment rate, which is calculated from a different survey from the headline job totals, edged lower because gains in the number of people employed outpaced an increase in the labor force, which includes people working and looking for jobs. In that survey of households, workers are counted as employed even if they were temporarily idled by the storms.
Average hourly wages jumped 12 cents to $26.55, lifting annual gains to 2.9 percent from 2.5 percent. With employers struggling to find qualified workers, analysts have been looking for a pickup in pay increases.
But the sharp rise last month may well be deceptive. It can probably be traced to the hurricanes, which kept many lower-paid part-time and temporary workers at home, boosting average earnings, said Ian Shepherdson, chief economist of Pantheon Macroeconomics.
Yet faster pay increases could come soon. The drop in unemployment likely means it will become even tougher for employers to find job candidates, forcing them to raise pay more substantially and juicing inflation that has been persistently sluggish.
“The soft payroll number will be ignored at the Fed,” Shepherdson said. “Unemployment is what matters, and this report therefore makes a (December) rate hike even more likely.”
Businesses lost 40,000 jobs. Federal, state and local governments added 7,000. The number of workers who stayed home because of weather surged by 1.5 million, the Labor Department said, though economist Jim O’Sullivan of High Frequency Economics said that measure “overstates weather effects on payrolls.”