Hur­ri­canes cause rare monthly US job loss but re­bound likely

The Progress-Index Weekend - - BUSINESS - By Christo­pher Ru­gaber

WASH­ING­TON — A pull­back in U.S. hir­ing last month re­sult­ing from Hur­ri­canes Har­vey and Irma will likely prove short­lived, with a re­silient job mar­ket point­ing to gains in the com­ing months.

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 pick­ing up.

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 hir­ing.

“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 be­gan.

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.

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