By Josh Mitchell
The U.S. economy was nicked by two summer hurricanes in September but is showing signs of underlying strength.
The country shed 33,000 jobs in September, the first loss in seven years, the Labor Department said Friday, ending the longest stretch of job growth on record.
But that decline was skewed down by Hurricane Harvey, which hit Texas in late August, and Irma, which hit Florida in early September. The storms came just before businesses filled out monthly surveys of payrolls, which are submitted to the government and used to tabulate hiring. Many businesses reported reduced payrolls during the survey week of Sept. 12. Employment in the restaurant industry, in particular, took a big hit, falling 105,000 in September from the month before, after averaging growth of 29,000 during the prior six months.
"The net effect of these hurricanes was to reduce the estimate of total nonfarm payroll employment for September," the Bureau of Labor Statistics said.
A separate survey of households, rather than businesses, told a different story. It showed a big jump in employment, by 906,000, in September alone and a 0.2 percentage point drop in the national unemployment rate to 4.2%, the lowest level since early 2001, which marked the tail end of a technology boom.
The survey of businesses counts a drop in employment if a person doesn't work and isn't paid during the survey week. The household survey counts a person as employed as long as he or she keeps the job. That might make the household survey a more reliable gauge. The Labor Department said the household survey wasn't notably affected by the storms, but the business survey likely was, and the storms had "no discernible effect on the national unemployment rate," the Labor Department said.
The household survey also included a clue about the potential breadth of the temporary impact of the storms on the economy. About 1.5 million people reported in the household survey that they had a job but weren't at work in September due to bad weather. That figure, not seasonally adjusted, was the highest since January 1996, when a blizzard hit the East Coast.
"Hurricanes Harvey and Irma blew this jobs report off course, but the strong household survey is reason enough to stay optimistic about the labor market's direction," said Jed Kolko, chief economist at job-site Indeed.
After previous storms, hiring has tended to pick up in industries like construction, but over time they tend to leave little lasting imprint on overall hiring trends.
Workers' wages jumped last month, but that figure, recorded in the business survey, may have been affected by the storms as well. Average hourly earnings rose 12 cents, or 0.45%, from a month earlier. Wages were 2.9% higher from a year earlier. One likely factor: Many low-wage workers in restaurants or hotels were temporarily unemployed because of the storms, pushing up the overall average for a time. The Labor Department estimates that one in 13 workers had a job in counties affected by the storms in September.
Private-sector economists have warned that the jobs figures, along with other economic data, will be skewed in coming months due to the hurricanes. A September jump in car sales, for instance, might have been skewed by a need for replacement cars among households in Texas and Florida after the hurricanes.
Other measures of economic activity suggest the economy remains on solid footing. For instance, the Institute for Supply Management reported earlier this week its monthly index of manufacturing activity hit a 13-year high in September. Individual claims for unemployment insurance have also tumbled after jumping shortly after the storms.
The strong economic undertones, including the latest drop in the jobless rate, likely keep the Federal Reserve on course to raise short-term interest rates for a third time this year in December. Unemployment is now below the Fed's forecast of 4.3% for the fourth quarter and it is well below the 4.6% rate at which the Fed sees an economy in balance with little inflation pressure.
The payroll decline "catches your attention -- it is not something that has happened in a long time," Federal Reserve Bank of Atlanta President Raphael Bostic told The Wall Street Journal during an interview Friday in Austin, Texas.
"The hurricanes introduced a lot of noise," Mr. Bostic added. "We're going to spend time trying to understand whether a negative 33,000 is a signal or is it really noise.
--Ben Leubsdorf and Eric Morath contributed to this article.
Write to Josh Mitchell at [email protected]