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Payrolls Suffer Hurricane Damage

Posted by Joseph Trevisani on Oct 6, 2017 12:15:08 PM

The busiest continental hurricane season in a decade brought the U.S. job market low in September but the underlying trends in employment, wages and participation and the necessary reconstruction point to labor strength in the months ahead.

Non-farm payrolls shed 33,000 jobs last month, the first outright decline in seven years even though the unemployment rate improved to 4.2 percent from 4.4 percent, a level not seen since February 2001, reported the Bureau of Labor Statistics on Friday. 

The job performance was far below the 90,000 estimate from economists in the Reuters survey but the unpredictability of the weather effect produced an unusually wide range of estimates from -45,000 to 209,000.  August's total was revised slightly higher to 169,000 from 156,000 but  July was downgraded to 138,000 from 189,000.  The 148,000 monthly average through September is the lowest in five years. 

Average hourly wages jumped 0.5 percent well ahead of the 0.3 percent projection and the 2.9 percent annual increase, up from 2.5 percent in August, was the largest since May of 2009, reached also last December.

The labor force participation rate rose to 63.1 percent, its highest level this year and though it is still far below its modern historical average it was the best score since March 2014.  The average workweek was unchanged at 34.4 hours.

Other recent economic data, business confidence and employment reports from the Institute for Supply Management covering general expectations and hiring in the service and manufacturing sectors showed some of the most positive attitudes since the recession and point to the continued prowess of the labor market. 

A secondary unemployment measure, the U-6 or underemployment rate which includes those working part-time who want a full-time position and anyone who has looked for work in the past year--the standard U-3 rate only counts searchers from the prior month--also dropped sharply to 8.3 percent  from 8.6 percent registering its best since June 2007. 

Manufacturing payrolls dropped 1,000 in September following August's revised gain of 41,000, the largest addition to factory employment in almost two decades.  Health care employment rose by 23,000, finance by 10,000 and professional and business services by 13,000. Construction employment increased 8,000.

Government payrolls climbed 7,000 in September, they had been expected to be flat, after rising 5,000 in August.  Hiring to all levels of government has averaged just 4,000 a month this year, a quarter of its 17,000 monthly average in 2016. 

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets

Charts: Thomson/Reuters, Alpha Trader

Non-Farm Payrolls

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Unemployment Rate

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Labor Force Participation

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Euro

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