U.S. economy loses 33,000 jobs after hurricanes, first Major decline in seven years

 

The U.S. economy lost 33,000 jobs in the aftermath of Hurricanes Harvey and Irma last month, the first decline since September 2010. The unemployment rate declined slightly to 4.2 percent.

Analysts had been expecting job growth to slump in September after the one-two punch from the hurricanes. This was worse than predicted but economists expect the numbers to rebound in coming months.

Average hourly wages rose 12 cents last month to $26.55, up 2.9 percent from a year ago

The government’s monthly jobs report, released Friday morning, offers the first glimpse at how workers and companies are faring in the aftermath of the storms, which slammed Texas and Florida.

Economists had estimated the nation would add about 75,000 jobs last month, landing in the five-figure range for the first time in half a year. They expected the unemployment rate to hold steady at 4.4 percent and for wages to inch upward.

The two hurricanes, which made landfall in late August and September, took a toll on job creation — although analysts were mixed on whether the effects would be permanent.

“There’s going to be a huge residual impact for months, maybe years afterward,” said Christine Short, vice president of media and public relations at Estimize, a financial estimates group. “The hurricanes put tens of thousands of people out of work.”

The number of Americans who filed for unemployment benefits hit a two-year high in the first week of September (298,000).

Robert Frick, corporate economist for Navy Federal Credit Union, said the surge of storms will have a bigger impact on jobs than researchers previously expected.

“It could easily knock 40,000 or 50,000 jobs off the total,” he said.

This devastation won’t drag down the broader economy, Frick predicted. Researchers expect October’s numbers to reflect a rebound, thanks in part to the rising demand for construction workers and plumbers and electricians to repair hurricane damage.

The storms will make it harder for analysts to take an accurate reading of the country’s economic temperature through the rest of the year, since it’s tough to untangle short-term effects from other factors.

“It’s going to fuzz up the numbers,” Frick said. “I hope the noise gets shaken out over the next two months.”

But there’s no reason to believe the country is drifting away from healthy growth, said Mark Hamrick, senior economic analyst at Bankrate.com.

This year, the economy has added an average of 175,000 jobs each month. It needs to produce 100,000 just to keep up with population growth.

As for September, analysts forecast that the average number of hours worked stayed about the same, while earnings will tick up 0.3 percent — a 2.6 percent jump from this time last year.

“We want to believe that underlying trend remains intact,” Hamrick said. “We expect the economy is sufficiently robust to continue to absorb the remaining slack in the workforce, and no one knows how much slack remains.”

In May, the unemployment rate dipped to a 16-year low of 4.3 percent — meaning that, theoretically, almost everyone who wants a job could find one. It inched up to 4.4 percent last month, but employers nationwide are still complaining about labor shortages, saying job-seekers lack the skills they need.

Joe Brusuelas, chief economist at the consultancy RSM, said that in storm-hit areas like Beaumont, Tex., and the Florida Keys, companies are already struggling to find workers who can pass a drug test, use tools and operate machinery.

“There is not a significant surplus of labor ready to re-enter the workforce to take relatively higher paying construction jobs that will be available in Houston and across much of Florida,” he said in an email. “The likely economic narrative going forward will be: Where are all the workers necessary to rebuild?”

FROM The Washington Post