Unemployment Rate Falls to 4.2% in September; Hurricanes Strip 33000 Jobs

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"Hurricanes Harvey and Irma hurt the job market in September", said Mark Zandi, chief economist at Moody's, which helps compile the ADP report.

Puerto Rico, which was devastated by Hurricane Maria, is not included in the BLS report. However, the storms did have an impact on jobs. It opened 65 stores nationwide in the July-September quarter. With these revisions, employment gains in those months combined were 38,000 less than previously reported. The new three-month average is now 91,000, well below the maintenance rate.

Service sector hiring was weakest, with companies shedding 49,000 staff last month versus a 98,000 person gain in August.

The total nonfarm employment drop of 33,000 comes from BLS's Establishment Survey (which only includes employees paid during the survey period, which ended September 12).

The household survey is an estimate of employed Americans, not of total jobs, and covers those who wouldn't show up on a payroll, such as the self-employed. Economists had expected payrolls to grow by 100,000 and unemployment rate to hold steady.

Economists had predicted nonfarm payrolls would increase by 90,000 jobs last month. We may learn more about the hurricanes' impact when state employment and unemployment estimates become available on October 20, 2017.

That's a notably different result than experts were predicting-even accounting for the hurricane impacts. One question on that survey asks whether people who normally have jobs were not at work because of bad weather. The unemployment rate is now close to what economists consider to be full employment.

With the hurricane-driven temporary unemployment concentrated in low-paying industries like retail and leisure and hospitality, average wage growth is forecast picking up. They rose 5.6 percent (annualized) and are up 2.9 percent year over year.

Average hourly earnings jumped by 0.5% month-over-month and 2.9% year-over-year, both accelerating from August. But the government said that figure was artificially inflated by the loss of so many lower-paid workers in hurricane-hit areas.

Of course, some sectors lost jobs for reasons unrelated to last month's hurricanes. As surveys go, it seems a little ... outlier-ish.

IBD'S TAKE:IBD readers may not have expected the market's melt-up over the past month, but they were ready to take advantage of it. That would be the lowest job gain since March.