Jobs Rebound After Hurricane Disruptions, Unemployment Rate Falls to 17-Year Low
BY: Akin Oyedele
The US economy added 261,000 nonfarm payrolls in October, the most in over a year, rebounding after weakness in September that was caused by hurricanes that hit Florida and Texas.
Economists had forecast a median increase of 313,000 after an initially reported drop by 33,000 in September. The September figure was revised to a gain of 18,000 in the Bureau of Labor Statistics’ data released Friday.
Restaurants, bars, and hotels made up much of the rebound in jobs, offsetting the decline in September that reflected disruptions from the hurricanes Irma and Harvey. The monthly report does not include Puerto Rico. The BLS data captured people who got paychecks for the month, and many employees in these industries weren’t paid when they were absent from work.
State-level data for September showed that Florida’s jobs market was affected the most by hurricanes, as payrolls declined by 127,000. It’s not certain that all those jobs were regained by the reference week for the October jobs report, which included the 12th day of the month.
“Hurricane job loss is in a given month (e.g., September) is typically followed by a bounce-back over the following three monthly payroll reports,” John Herrmann, a rates strategist at MUFG Securities, said in a note. That means the distortions may continue through the end of this year.
The unemployment rate fell to 4.1%, its lowest since 2000. The size of the workforce also shrank, indicating that the unemployment rate’s drop was caused by fewer people looking for jobs.
Average hourly earnings growth in October was flat (0.2% month-on-month expected), largely skewed by the number of workers in lower-paying jobs who returned to their jobs after the hurricanes. Earnings rose 2.4% year-on-year versus 2.7% expected.
“Today’s number is not a game changer from a market-participant standpoint,” said Tony Bedikian, the head of global markets at Citizens Bank. “It’s probably not from the Fed’s view as well. The market is still anticipating the likelihood of a December hike. Today’s number doesn’t sway that overall market view.”