A U.S. Jobs Update: Making Sense of Employment Numbers, Hurricane Impact And More
October 16, 2017
By Krista Biernbaum
This month starts the release of U.S. economic data reports for September. We will get an idea of the impact Hurricanes Harvey, Irma, and Maria will have on the U.S. economy. One of the more important reports concerns employment, tracking the progress of the U.S. labor market.
In September, U.S. employers subtracted 33,000 jobs. Most economists were expecting a positive but low number; none believed jobs would be lost. This marks the first month since 2010 we saw a decline in the monthly payroll numbers. That said, the gravity of this disappointing jobs reports is somewhat diminished because it was solely due to the impact of the hurricanes on day-to-day life. Food services saw the largest loss of employees. Restaurants are significant employers, but only if customers can get to them.
One of the data points not affected by the storms was the unemployment rate. If you can’t get to work due to a storm, you are still considered employed if you have a job during that time. In September the unemployment rate fell to 4.2% as more people entered the workforce. Even the broader measure, the underemployment rate (which includes part-time workers who would like to work full time and discouraged workers), moved in the right direction. It fell to 8.3% in September; its lowest level since before the recession.
I would not worry about September’s jobs report; it is likely to be a one-off month. Most economists believe the decline in payrolls will be temporary as well. As I noted in a prior commentary, economic data released over the next few months will be noisy. Historically, major hurricanes have had a near term impact on growth followed by a slow rebound as people start to rebuild and move forward. The net impact for the overall U.S. economy should be minimal.
The labor market remains healthy and should help the broad economy continue to move forward at a gradual pace. With international growth positive as well, as Michael List talked about in last week’s commentary, things bode well for stock market returns for the remainder of the year.
Is your portfolio on track to help you meet your goals? If you would like to discuss the U.S. labor market in further detail, or how our outlook affects your portfolio construction, contact your Security National Bank Wealth Management team