By Ben Sirois, Economist, Dodge Data & Analytics
BEDFORD, MA – October 10, 2017 – Nonfarm payrolls fell well below consensus predictions last month, subtracting a seasonally adjusted 33,000 jobs in September, well short of the 80,000 predicted in a Bloomberg poll of economists and the first negative reading in 84 months. This is widely attributed to Hurricanes Harvey and Irma, affecting Texas and Florida respectively. Signs of underlying strength remain and a significant rebound in US payrolls is expected later this year which will likely keep 2017 annual averages closer to the recent trend. Job gains for July were revised downward by 51,000 while August payrolls were adjusted upward by 13,000, subtracting a net of 38,000 jobs in revisions. With these changes, the 2017 year-to-date average fell to 148,000. However, if the anomalous September number is excluded, the average sits at a healthier 171,000. Labor force participation, still low by historical standards, increased to its highest level since March 2014 at 63.1% in September. The unemployment rate fell to a new low in this cycle at 4.2%.
The private sector lost 40,000 jobs in September, led by a large decrease in leisure and hospitality (-111,000). Sectors that added to their payrolls were led by education and health services (+27,000), transportation and warehousing (+21,800) and professional and business services (+13,000). Total construction payrolls continued to post gains, adding 8,000 in September, led by specialty trade contractors (+8,500) and nonresidential builders (+4,800). Residential building and heavy/civil engineering payrolls saw modest declines of 3,900 and 1,600 respectively. The public sector added 7,000 jobs in September with state and local governments increasing by 2,000 and 5,000 respectively. Federal employment growth was flat last month.
Headline wage growth saw a moderate uptick in September, increasing 2.9% year on year. However, this may be a one-time occurrence as most job losses last month came in lower paying categories like leisure and hospitality. While encouraging, another month or two of data is required before the argument can be made that salary growth has broken out of its stubbornly persistent mid-2 percent growth.
Moreover, the full effects of hurricanes Harvey and Irma may take several months to show in the data. September payrolls were significantly dampened by the extreme weather events, and October job growth may be muted as well. Hurricane Irma made landfall on September 10, during the survey period, so its effects may linger into next month’s numbers. However, a significant rebound in payrolls is expected as rebuilding efforts fully ramp up in coming months.
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Eric Becker | 104 West Partners | firstname.lastname@example.org
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