Damage from US hurricanes to blur Friday's Sept. jobs report
Posted October 4
WASHINGTON — Damage from two catastrophic hurricanes means that the government's September jobs report being released Friday will provide a blurrier-than-usual snapshot of the economy.
With Harvey and Irma having inflicted destruction on Florida, Texas and other parts of the Southeast, thousands of businesses had to shut their doors and left many people temporarily out of work. Yet the decline in employment should be short-lived. A hiring rebound is expected for October or November.
The likely tepid job gain in the government's September jobs figures was foreshadowed by a report Wednesday from ADP, a payroll processor. ADP said its monthly survey showed that private businesses added 135,000 jobs last month, far fewer than the 228,000 added in August.
If September's job gain does prove artificially low as a result of the hurricanes and October's or November's artificially high, economists and the Federal Reserve may find it hard to assess the state of the economy with any precision over the next couple of months. Even so, most Fed watchers expect the central bank to raise its benchmark interest rate when it meets in December.
Excluding the hurricanes' effect on the monthly hiring data, a number of barometers suggest that the economy and job market remain in solid shape.
Economists have forecast that the government's jobs report being released Friday will show that employers added just 80,000 jobs in September, barely half the 156,000 for August, according to data provider FactSet. It would be the fewest job gains since March.
The storms likely depressed job growth because of their effects on hourly workers. If hourly employees miss a paycheck because of a hurricane, they aren't counted as employed in the government's jobs figures, even if they return to work after the storms. In addition, the hurricanes likely forced the delay of some job interviews and applications, thereby reducing actual hires.
Harvey caused about $76 billion to $87 billion in economic losses, according to Moody's Analytics, an economic consulting firm. The estimate includes damage to homes and businesses, as well as lost business and economic output. That calculation would make Harvey the second-worst U.S. natural disaster, after Hurricane Katrina in 2005.
Irma will likely end up having caused $58 billion to $83 billion in economic losses, Moody's forecasts. Maria, which hammered Puerto Rico and the U.S. Virgin Islands, could cost $45 billion to $95 billion, though that is a preliminary estimate.
There are signs, though, that the U.S. economy is already rebounding. On Wednesday, a survey of services firms — covering restaurants, construction companies, retail stores, banks and others — found that they expanded in September at their fastest monthly pace since 2005.
That report "is a clear sign that the economy is recovering quickly from any hurricane-related disruption and that the underlying pace of growth remains strong," said Michael Pearce, an economist at Capital Economics.
And auto sales, which had been lackluster this year, jumped 6.1 percent to more than 1.5 million in September from a year ago, according to Autodata Corp., as Americans began to replace cars destroyed by the storms. That should soon force automakers to step up production.
Mark Zandi, chief economist at Moody's Analytics, which helps compile ADP's data, said the storms probably cost 50,000 to 60,000 jobs. Without the hurricanes, job gains would have been closer to the average monthly pace of the past two years — a healthy 185,000.
Job growth at that level is enough to reduce the unemployment rate over time. The unemployment rate in August was 4.4 percent, near a 16-year low.
U.S. factories are growing at a solid pace, supported by a healthy global economy and a decline in the value of the dollar, which makes U.S. goods less expensive overseas. A survey of manufacturers showed that factory activity expanded at its fastest pace in more than 13 years. New orders, production and employment all rose.
Construction companies may already be staffing up for rebuilding and recovery from the hurricanes. They added 29,000 jobs in September, ADP said, the most in six months.
The ADP figures exclude government employees and often diverge from the government's own job figures.