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Wall Street to Your Street
Hurricanes Knock Job Growth Off Track But Unemployment Rate Falls
October 11, 2017 | Mark Simenstad, Chief Investment Strategist
Employment dropped in September for the first time after 83 consecutive weeks of growth, as economic activity was slowed by Hurricanes Harvey and Irma in Texas and Florida, according to the U.S. Bureau of Labor Statistics Employment Situation Report from October 6, 2017.
Despite the drop of 33,000 jobs, the unemployment rate dropped 0.2% to 4.2%, which is the lowest rate since 2000 (Exhibit 1).
The drop in jobs in September came after the economy gained 169,000 jobs in August and 138,000 in July (revised). The unemployment rate dropped from 4.4% to 4.2%, as a net 331,000 people dropped out of the work force.
Wage growth was improved over recent months. Average hourly earnings for all employees on private nonfarm payrolls rose by $0.12 to $26.55. Over the past 12 months, average hourly earnings have increased by $0.74, or 2.9% (Exhibit 2).
Initial jobless claims have remained at an extremely low level, with 268,250 the week ending September 30, according to the Department of Labor Unemployment Insurance Weekly Claims report (Exhibit 3). Jobless claims have remained under 300,000 for 135 consecutive weeks – the longest stretch since 1970.
In all, 1.94 million Americans are receiving unemployment benefits, a slight drop from the previous month. That remains at about the lowest level since the mid-1970s. This is even more impressive considering the difference in the size of the labor force.
Here are some of the other key trends highlighted in the report:
- The number of long-term unemployed (those jobless for 27 weeks or more) dipped 0.1% to 1.7 million and accounted for 25.5% of the unemployed (Exhibit 4). Year-over-year, the number of long-term unemployed was down 14% from a year earlier, but still remains at an elevated level.
- The number of persons employed part time for economic reasons, was down slightly to 5.1 million from 5.3 million a month earlier (Exhibit 5).
- The average workweek for all employees on private nonfarm was unchanged at 34.4 hours.
- The labor force participation rate improved slightly from 62.9% in August to 63.1% in September. The employment-population ratio increased by 0.3% in September to 60.4%.
- The labor force participation rate for those in their prime working years (age 25-54) improved by 0.2% to 81.8%, which is about 1.2% below the pre-recession level (Exhibit 6). That continues to be a weakness in the employment recovery.
We believe the hurricanes in Texas and Florida had a short-term effect on job growth,
but we expect the positive job growth trend to continue in the coming months. In fact,
we may see employment and wages pick up in the hurricane-affected areas.
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All information and representations herein are as of October 6, 2017, unless otherwise noted.
The views expressed are as of the date given, may change as market or other conditions change, and may differ from views expressed by other Thrivent Asset Management associates. Actual investment decisions made by Thrivent Asset Management will not necessarily reflect the views expressed. This information should not be considered investment advice or a recommendation of any particular security, strategy or product.
Asset management services are provided by Thrivent Asset Management, LLC, a wholly owned subsidiary of Thrivent Financial, the marketing name for Thrivent Financial for Lutherans.