CHRISTOPHER RUGABER, AP Economics Writer
WASHINGTON (AP) – The U.S. shed 33,000 jobs in September because of Hurricanes Harvey and Irma, which closed thousands of businesses in Texas and Florida and forced widespread evacuations. It marked the first monthly hiring drop in nearly seven years.
The unemployment rate fell to 4.2 percent from 4.4 percent, the Labor Department said Friday, the lowest level since 2001 and a sign that the job market remains fundamentally solid. Hiring is expected to rebound in coming months as businesses in the area reopen and bring back employees and construction companies ramp up repair and renovation work.
“The labor market remains in good shape,” said Gus Faucher, chief economist at PNC Financial. “The job losses were due to disruptions from hurricanes, not underlying weakness in the economy.”
Last month's drop was driven by huge losses in restaurants and bars, which accounted for 105,000 fewer jobs, a sign of the damage to Florida's tourism industry. Roughly 1.5 million people were unable to work last month because of the weather, the government said, the most in 20 years.
Outside of hurricane-hit areas, plenty of Americans found work. The number of people describing themselves as unemployed fell to 6.8 million, the fewest since March 2007, before the Great Recession began. That sign of health makes it appear all but certain that the Federal Reserve will raise its benchmark short-term interest rate in December. According to data from the CME Group, investors now foresee a 93 percent chance of a Fed rate hike then.
Fed Chair Janet Yellen has said she expects pay raises to accelerate as unemployment declines.
Hourly workers who couldn't work because of the storms and missed a paycheck would have been counted as not working in the government's survey of businesses, thereby lowering September's job total. That's true even if those employees returned to work after the storm passed or will return.
The unemployment rate fell because it is calculated with a separate survey of households. That survey counted people as employed even if they were temporarily off work because of the storms. In fact, the proportion of adults who have jobs rose to 60.4 percent, the highest since January 2009.
Average hourly wages rose a healthy 2.9 percent from 12 months earlier. Still, the government said that figure was artificially inflated by the loss of so many lower-paid workers in hurricane-hit areas. The result was that higher-paid workers disproportionately boosted the wage figure.
More than 11 million people had been employed in the 87 counties in Texas and Florida that were declared disaster areas, the government says. That's equal to about 7.7 percent of the nation's workforce.
Other recent indicators point to a solid economy and job market. This week, 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 followed a survey of manufacturers, which found an equally strong gain. Factory activity expanded at the fastest pace in more than 13 years.
Some signs suggest that a rebound from the hurricanes is already boosting the economy. 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 increase in purchases should soon lead automakers to step up production.
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 b illion 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.
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