Hurricane Katrina wiped out thousands of jobs last month, helping push the nation's unemployment rate up to 5.1 percent, the Labor Department reported yesterday while also indicating that the U.S. labor market remained strong outside the areas devastated by the storm.
"We can't ignore the pain in the Gulf Coast, but we shouldn't ignore, either, that for the rest of the country, the economy looks to be in good shape," said William Cheney, chief economist for John Hancock Financial Services Inc.
The U.S. economy lost 35,000 payroll jobs in September -- the first decline in more than two years -- after gaining an average of 194,000 a month in the 12 months ended in August. Without Katrina, however, national job growth would have kept to that pace, Philip L. Rones, deputy commissioner in the Bureau of Labor Statistics, said in a written statement.
"It is clear that Hurricane Katrina adversely affected labor market conditions in September," Rones said.
By last week, 363,000 people had filed new claims for unemployment insurance benefits because of Katrina, which struck Aug. 29, and Hurricane Rita, which hit Sept. 24, the department said in a separate report Thursday. The broader BLS employment report released yesterday was based on surveys conducted after Katrina but before Rita.
Katrina flattened workplaces and homes, pushed up energy prices and dampened consumer confidence, causing many analysts initially to wonder whether employers across the country would shelve hiring plans or lay off workers in anticipation of an economic slowdown.
But the BLS report eased such concerns. The net loss of 35,000 jobs in September left the national total little changed at 142.4 million. The number of jobs lost because of the storms and other factors was nearly offset by job gains resulting from recovery efforts in the disaster areas and hiring elsewhere.
Signs of Katrina's effects appear in the loss of 80,000 jobs last month in the leisure and hospitality industries, which include hotels, motels, restaurants and casinos, analysts noted. Employers in this sector had added an average of 31,000 jobs a month for the previous six months. Similarly, retailing shed 88,000 jobs last month after adding an average of 23,000 a month in the previous six months.
Meanwhile, employers across the country continued hiring workers to provide professional, business, education and health services. Some of that job growth reflects post-hurricane recovery efforts, which have boosted demand for temporary workers, architects, engineers, doctors and nurses. Construction employment kept growing last month as well, reflecting rebuilding needs in the Gulf Coast states as well as the housing boom elsewhere.
Employers also hired more workers in July and August than previously reported, the Labor Department said, adding a combined 77,000 jobs to its earlier totals.
The Federal Reserve is likely to see the labor market's health as another reason to keep raising its short-term interest rate in coming months to make sure inflation does not take off, analysts said.
The unemployment rate had fallen to 4.9 percent in August, the lowest level in four years. The rate rose to 5.1 percent in September in part because of job losses but also because hundreds of thousands more people rejoined the labor force to look for work, the department's data show.
The unemployment rate among white people rose to 4.5 percent in September from 4.2 percent in august. The rate among blacks fell to 9.4 percent from 9.6 percent. The rate among Latinos rose to 6.5 percent from 5.8 percent.
The September jobs report is "going to be the worst we get" as a result of Katrina and Rita, said Richard A. Yamarone, director of economic research at Argus Research Corp.
The federal government, insurance companies and businesses are pouring billions of dollars into reconstruction efforts, which should boost job growth in coming months, he said.
"Employment is going to soar as everyone flocks to the Gulf region to get jobs."