U.S. sheds jobs for first time in 7 years

Hur­ri­canes lead to 33,000 losses, but wages show growth

USA TODAY Weekend Extra - - FRONT PAGE - Paul David­son

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 16-year low, and there were other 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% to 4.2%, the low­est since Fe­bru­ary 2001, the La­bor Depart­ment said Friday. And 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,” Joel Naroff of Naroff Eco­nomic Ad­vi­sors says.

The un­em­ploy­ment rate, which is cal­cu­lated from a dif­fer­ent sur­vey than the head­line job to­tals, edged lower. That’s

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% from 2.5%. 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 low­er­paid part-time and tem­po­rary work­ers at home, boost­ing av­er­age earn­ings, says Ian Shep­herd­son, chief econ­o­mist of Pan­theon Macroe­co­nomics.

Yet faster pay in­creases may 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 says. “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.”

Job gains for July and Au­gust were re­vised down by 38,000. July was down­graded to 138,000 from 189,000 and Au­gust was re­vised up to 169,000 from 156,000.

Econ­o­mists had es­ti­mated the storms would re­sult in a mod­est 80,000 em­ploy­ment in­crease, ac­cord­ing to a Bloomberg sur­vey. Hur­ri­cane Har­vey bar­reled into the Hous­ton area in late Au­gust, and Irma lashed Florida in early Septem­ber, shut­ting down many busi­nesses and mak­ing it dif­fi­cult for work­ers to travel to job sites

The hur­ri­canes’ im­pact was most ev­i­dent in pay­rolls for bars and restau­rants, which lost 105,000 jobs after adding an av­er­age 24,000 a month over the past year as the storms kept both em­ploy­ees and cus­tomers from ven­tur­ing out. Health care added 23,000 jobs; trans­porta­tion and ware­hous­ing, 22,000; pro­fes­sional and busi­ness ser­vices, 30,000; and con­struc­tion, 8,000. Man­u­fac­tur­ing cut 1,000 jobs.

Job growth, in turn, was ex­pected to spike in com­ing months as the idled em­ploy­ees re­turn to work. The volatile tal­lies, along with other eco­nomic data that have been dis­torted by the storms, will make it dif­fi­cult for the Fed­eral Re­serve to get an un­tainted view of the econ­omy as it weighs an­other in­ter­est rate hike late this year.

But the Institute for Sup­ply Man­age­ment’s in­dexes of man­u­fac­tur­ing and ser­vice sec­tor ac­tiv­ity, which are less af­fected by weather, both showed the fastest growth in more than a decade last month as their em­ploy­ment mea­sures surged. And ini­tial job­less claims, a gauge of lay­offs, have re­mained near 40-year lows, notwith­stand­ing hur­ri­cane-re­lated in­creases.

There were also other en­cour­ag­ing signs in Friday’s jobs re­port. A broader mea­sure of un­em­ploy­ment that in­cludes dis­cour­aged Amer­i­cans who have stopped look­ing for work and part-time em­ploy­ees who pre­fer full-time jobs fell to 8.3% from 8.6%.

And the share of Amer­i­cans work­ing or look­ing for jobs rose from 62.9% to 63.1%, high­est since March 2014. That mea­sure gen­er­ally has trended down as Baby Boomers re­tire but it has edged higher the past two years as the im­prov­ing la­bor mar­ket coaxes dis­cour­aged work­ers back into job searches.

Gen­er­ally, job growth has been solid in 2017, es­pe­cially in light of a low un­em­ploy­ment rate. Be­fore Friday’s re­port, pay­roll gains av­er­aged 176,000 this year, down from 187,000 last year and 226,000 in 2015. After the losses in Septem­ber, av­er­age monthly job growth this year fell to 148,000.

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