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U.S. economy loses 33,000 jobs after hurricanes, first decline in seven years. But unemployment falls to 4.2 percent

The government’s monthly jobs report offers the first glimpse at how workers and companies are faring in the aftermath of the storms, which slammed Texas and Florida. (Ralph Barrera/Austin American-Statesman/AP)

The U.S. economy lost 33,000 jobs in the aftermath of Hurricanes Harvey and Irma last month, the first decline since September 2010. The unemployment rate declined slightly to 4.2 percent, the lowest since February 2001.

Analysts had been expecting job growth to slump in September after the one-two punch from the hurricanes. This was worse than predicted: The decline in job growth ended a historic 83-month stretch of expansion, the longest such streak since the Bureau of Labor Statistics began the survey in the 1930s.

But economists expect the numbers to rebound in coming months and the economy to continue to grow. Wages are also starting to improve at a noticeable pace. Average hourly wages rose 12 cents last month to $26.55, up 2.9 percent from a year ago.

The government’s monthly jobs report, released Friday morning, offers the first glimpse at how workers and companies are faring in the aftermath of the storms, which slammed Texas and Florida.

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“This really does look like what happened following Hurricane Katrina 12 years ago, where there were two very soft employment numbers followed by a reassertion of the underlying trend in subsequent months,” said Joe Brusuelas, chief economist at RSM US LLP, which provides audit, tax and consulting services for companies. “This is nothing to worry about.”

More significant, economists say, is the increase of 906,000 jobs in the survey of U.S. households, which is used to calculate the unemployment rate. Brusuelas said it was evidence of a “red hot labor market.”

U.S. Labor Secretary Alexander Acosta said in a statement that the report “reflects the resilience of the American economy.”

The 33,000 loss gleaned from the survey of employers reflects the decline in the number of paychecks issued during the survey period. But 906,000 more Americans are actually employed.

“The difference in these two numbers is that more Americans are employed, yet many missed a paycheck in September,” Acosta said.

The higher than usual wage increase reflects steep job losses of 105,000 positions in the leisure and hospitality sector, particularly in food services and drinking places, following the hurricanes — jobs that typically pay the lowest wages.

“If you have a lot of missing people in leisure and hospitality, which are the lowest wage workers, that pulls up the average,” said Andrew Chamberlain, chief economist for Glassdoor.

Other industries experienced gains. Transportation and warehousing added 22,000 jobs, likely resulting from the continued growth of online retailers, Chamberlain said. Healthcare, which has been steadily adding jobs as the baby boomers age, added 23,000 jobs.

Despite ominous warning signs about the economy in the report, Chamberlain said, “I don’t expect this to be the start of a downturn. This really reflects the tragic damage from Hurricanes Harvey and Irma, but the labor market is fundamentally healthy.”

Puerto Rico job losses were not included in the report, released by the Labor Department's Bureau of Labor Statistics.

Economists had estimated the nation would add about 75,000 jobs last month, landing in the five-figure range for the first time in half a year. They expected the unemployment rate to hold steady at 4.4 percent and for wages to inch upward.

The two hurricanes, which made landfall in late August and September, took a toll on job creation — although analysts were mixed on whether the effects would be permanent.

“There’s going to be a huge residual impact for months, maybe years afterward,” said Christine Short, vice president of media and public relations at Estimize, a financial estimates group. “The hurricanes put tens of thousands of people out of work.”

The number of Americans who filed for unemployment benefits hit a two-year high at 298,000, in the first week of September.

Robert Frick, corporate economist for Navy Federal Credit Union, predicted the devastation from the storms won't drag down the broader economy.

Researchers expect October’s numbers to reflect a rebound, thanks in part to the rising demand for construction workers and plumbers and electricians to repair hurricane damage.

The storms will make it harder for analysts to take an accurate reading of the country’s economic temperature through the rest of the year, since it’s tough to untangle short-term effects from other factors.

“It’s going to fuzz up the numbers,” Frick said. “I hope the noise gets shaken out over the next two months.”

But there’s no reason to believe the country is drifting away from healthy growth, said Mark Hamrick, senior economic analyst at

The economy has added an average of 172,000 jobs each month over the past year. It needs to produce 100,000 just to keep up with population growth.

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“We want to believe that underlying trend remains intact,” Hamrick said. “We expect the economy is sufficiently robust to continue to absorb the remaining slack in the workforce, and no one knows how much slack remains.”

Federal economists have revised down their estimate of how many jobs were created in July and August by a combined total of 38,000. They now estimate 138,000 jobs were created in July and 169,000 jobs were created in August.

In May, the unemployment rate dipped to a 16-year low of 4.3 percent — meaning that, theoretically, almost everyone who wants a job could find one. It inched up to 4.4 percent last month, but employers nationwide are still complaining about labor shortages, saying job-seekers lack the skills they need.

Brusuelas, the RSM economists, said that in storm-hit areas like Beaumont, Tex., and the Florida Keys, companies are already struggling to find workers who can pass a drug test, use tools and operate machinery.

“There is not a significant surplus of labor ready to re-enter the workforce to take relatively higher paying construction jobs that will be available in Houston and across much of Florida,” he said in an email. “The likely economic narrative going forward will be: Where are all the workers necessary to rebuild?”

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