Unemployment Rate Declined In September, Hurricanes Impacted Foodservice Employment

Saturday, 07 Oct, 2017

The employment situation for mining jobs in the U.S., which includes oil and gas extraction, was relatively unchanged in September, according to data released October 6 from the U.S. Bureau of Labor Statistics (BLS).

U.S. non-farm payrolls declined 33,000 for September compared with expectations of a gain around 85,000 for the month and this was the first reported decline for over seven years.

The jobless rate dropped to 4.2%, the lowest since 2001.

However, a sharp 111,000 reduction in the number of leisure and hospitality jobs had the unexpected result of driving a 0.5% leap in average hourly earnings, versus the 0.3% rise the consensus had expected to see.

That's the highest number in 20 years.

Average hourly earnings increased by 12 cents to $26.55, after a 4-cent increase in August. The proportion of Americans with jobs rose to a almost nine-year high. The bureau reported that in food service employment, "a large majority of workers are not paid when they are absent from work".

The Labor Department had warned that Hurricanes Harvey and Irma could impact the September jobs data. That would make Harvey the second-worst USA natural disaster, after Hurricane Katrina in 2005.

The unemployment rate fell because it is calculated with a separate survey of households.

There are 23,000 employers in the 87 disaster-declaration counties included in the Labor Department's monthly survey of about 147,000 businesses and government agencies. "It declined even as the labor force participation rate rose to 63.1 percent, its highest level all year and the best reading since March 2014".

Economists expect the job market to rebound from the hurricane damage in coming months as workers get back to their jobs and rebuilding begins.

Puerto Rico, which was devastated by Hurricane Maria, is not included in the BLS report.

Looking further into the data, there is some good news in an otherwise very disappointing month. This demonstrates that the jobs market remains in roughly the same shape it has been for the balance of the year. CME Fed Watch Tool is now showing that investors are pricing in a 96.7% chance of a 25 basis-point hike in December, up from 86.7% registered prior to the release.

"We have to take everything with a note of caution given the likelihood of heavy distortions relating to hurricanes", said James Knightley, worldwide economist at ING. That survey counted people as employed even if they were temporarily off work because of the storms.