‘Sort of’ Ignoring the September Jobs Report
There is so much noise in the September jobs report that just about everybody is taking it with a grain of salt. I know it can come across as a “pro-Trump” statement, it’s not intended to. But in truth, Hurricanes Harvey and Irma specifically had a significant September impact on the jobs report.
Even the Bureau of Labor Statistics had a special call-out in their Employment Situation Summary.
The US saw a net decline in the number of jobs created in September, it was down 33,000. We have been creating about 170,000 consistently over the past two years.
Employment in the Houston area alone is about 3.042 million. The state of Florida (which Irma impacted entirely) has employment of just over 10 million. The point being, it would be easy for about 200,000 jobs to be impacted between the two hurricanes alone.
Despite the weaker headline figure, most analysts believe that th is won’t sway the Federal Reserve or prevent it from raising interest rates in December.
As we always do, here are the highlights from the monthly jobs report:
o Jobs Created -33,000
o Unemployment Rate 4.2% (declined…ironically)
o U6 Unemployment Rate 8.3% (declined by .3 points)
o Participation Rate 63.1% (unchanged)
o Jobs by Major Sector:
- Restaurants -105,000 (hurricane impact)
- Health Care +23,000
- Transportation +22,000
- Financial +10,000
- Insurance* +11,000 (hurricane impact)
- Credit/Banking -7,000
- Prof/Business Services +13,000 (normally 50,000/month)
- Manufacturing -1,000 (normally 14,000/month)
- Mining, construction, wholesale trade, retail trade, information, and government unchanged.
o Average hourly earnings +2.9% (over the past 12 months)
We also need to note that there were revisions to the prior two months, collectively we saw job gains come in about 38,000 less than previously reported. That’s a negative – because it had little if anything to do with weather-related job loss. There could be an underlying trend there going into the busy peak fall retail season. We’ll have to watch it and see if it rebounds.
One last note, the U6 unemployment rate is one that we watch closely. Note that it is now down to levels that we haven’t seen since the rapidly expanding 2004-2006 period. This is another reason why the Federal Reserve is probably willing to hike interest rates sometime yet this year (probably December).
As we said, we should take this month’s jobs picture with a grain of salt. But, we also need to take the next couple of months with a grain of salt until the immediate hurricane impact has settled. We could easily see a strong figure next month (except for jobs that were permanently removed because a business was destroyed and didn’t reopen or will take months to return to operating).