U.S. employment fell in September for the first time in seven years as Hurricanes Harvey and Irma left displaced workers temporarily unemployed and delayed hiring, the latest indication that the storms undercut economic activity in the third quarter.
The Labor Department said on Friday nonfarm payrolls decreased by 33,000 jobs last month amid a record drop in employment in the leisure and hospitality sector.
The decline in payrolls was the first since September 2010. The Department said its analysis suggested that the net effect of Harvey and Irma, which wreaked havoc in Texas and Florida in late August and early September, was to “reduce the estimate of total nonfarm payroll employment for September.”
“While nonfarm payrolls declined last month, investors will find solace in a whole host of other labor market indicators that reveal an underlying labor market that continues to show evidence of resilience and continued tightening,” said Scott Anderson, chief U.S. economist at Bank of the West in San Francisco.
Economists had forecast payrolls increasing by 90,000 jobs last month. Payrolls are calculated from a survey of employers, which treats any worker who was not paid for any part of the pay period that includes the 12th of the month as unemployed.
Many of the dislocated people will probably return to work. That, together with rebuilding and clean-up is expected to boost job growth in the coming months. Leisure and hospitality payrolls dived 111,000, the most since records started in 1939, after being unchanged in August.
There were also decreases in retail and manufacturing employment last month. Stripping out the effects of the hurricanes, the labor market remains strong.
The government revised data for August to show 169,000 jobs created that month instead of the previously reported 156,000.Harvey and Irma did not have an impact on the unemployment rate, which fell two-tenths of a percentage point to 4.2 percent, the lowest since February 2001. The smaller survey of households from which the jobless rate is derived treats a person as employed regardless of whether they missed work during the reference week and were unpaid as result.
The decrease in the unemployment rate reflected a 906,000 surge in household employment, which offset a 575,000 increase in the labor force.
The dollar was trading higher against a basket of currencies after the data, while prices for U.S. Treasuries fell. Stocks on Wall Street fell marginally.