Total nonfarm employment declined by 33,000 net jobs in September compared with an upwardly revised gain of 169,000 the previous month. The Labor Department said 1.5 million workers — the most in 20 years — were not at their jobs during the survey week last month because of bad weather.
Restaurants and bars took the biggest hit. Total employment in September declined by 105,000 “as many workers were off payrolls due to the recent hurricanes,” the Labor Department said.
The sector had averaged job growth of 24,000 over the previous 12 months.
Analysts had expected the major hurricanes that devastated large parts of Texas and Florida would significantly reduce job growth in September, but the decline was much bigger than expected.
“The first thing that comes to mind here is the scene in ‘The Wizard of Oz,’ where we hear the line ‘pay no attention to the man behind the curtain,” said Mark Hamrick, senior economic analyst at financial information website Bankrate.Com.
“Because of the impacts from hurricanes and flooding, the decline reported in September payrolls doesn’t carry weight this time around,” he said.
Although much of the report will be discounted because of the temporary weather effects, there were some good signs.
The unemployment rate, which is calculated differently, declined to 4.2 percent in September, from 4.4 percent the previous month. That was the lowest level since 2001.
And average hourly earnings jumped by 12 cents in September to $26.55. That was the biggest increase since 2007. For the 12 months ended Sept. 30, wages were up 2.9 percent, well above the low inflation rate.
But the sharp wage growth was probably a temporary boost related to the hurricane, said Gus Faucher, chief economist at PNC Financial Services Group. With so many lower-wage restaurant and bar workers out of the calculation, average earnings got an artificial bump up, he said.
“My guess is that was skewed,” Faucher said.
Economists expect the job market to rebound from the hurricane damage in coming months as workers get back to their jobs and rebuilding begins.
“We should get a boost over the months ahead because you’re going to have reconstruction efforts from insurance payments and federal aid,” Faucher said. “We’re going to make up for it late 2017 and early 2018.”
The Labor Department had warned that Hurricanes Harvey and Irma could impact the September jobs data. Hurricane Harvey hit Texas on Aug. 25, and Hurricane Irma hit Florida on Sept. 10.
The Federal Emergency Management Agency declared 87 counties as disaster areas in the two states. Those counties have about 11.2 million workers — 7.7 percent of the nation’s non-farm labor force, BLS said.
The jobs report does not include the U.S. Virgin Islands and Puerto Rico.
If a worker doesn’t receive any pay for the survey pay period, which is in the middle of the month, the Labor Department considers that person unemployed. Businesses destroyed or that could not be contacted by the Labor Department because of storm damage would affect the jobs numbers as well.
There are 23,000 employers in the 87 disaster-declaration counties included in the Labor Department’s monthly survey of about 147,000 businesses and government agencies.
The unemployment rate is calculated through a survey of 60,000 households.
“While the monthly labor market report typically draws a high level of attention and scrutiny, we think less weight will be place on this month’s payroll data as the recent hurricanes have potential to significantly distort the data,” Charlie Ripley, senior investment strategist for Allianz Investment Management, an investment advisory firm, wrote in a note on Thursday.