Employment fell by 33,000 in September, according to Bureau of Labor Statistics establishment survey, the first decline since September of 2010. The drop was due to the effects of the hurricanes in Texas and Florida. This is shown clearly from the loss of 104,700 jobs in restaurants. Offsetting this bad news, the household survey showed the unemployment rate falling to 4.2 percent, a new low for the recovery.
This was due to a reported surge in employment of 906,000. This increased the employment to population ratio to 60.4 percent, a new high for the recovery. The household data are erratic (reported employment fell 74,000 in August), so this jump is likely to be at least partially reversed next month.
Trying to pull out the effects of the hurricane is difficult. One item that is disturbing was a downward revision to the August job growth number of 51,000 to 138,000. Since the reference period was the middle of the month, this was not the result of the hurricanes. The rate of job growth was already substantially below the 193,000 monthly average for 2016 and 226,000 for 2015. The downward revision for August and the decline in September pushes the pace down further, although October is virtually certain to show a sharp rebound.
There does appear to be a substantial uptick in wage growth in the data, with the average hourly wage rising 12 cents in September. This brings the year over year increase to 2.9 percent. The average over the last three months compared with the average for the prior three months rose at an even more rapid 3.6 percent annual rate. However these numbers should be viewed with some caution. The hurricanes reduced hiring in the month across the board and the newly hired are generally the lowest paid. This compositional effect can be seen with the loss of restaurant jobs. Since these jobs pay over $10 below the overall average, the loss of more than 100,000 restaurant jobs has the effect of raising the average hourly wage by roughly 1 cent. This compositional effect is occurring within every industry. It is worth noting in this respect that the pay of production and non-supervisory workers rose by 9 cents in September and is up by 2.5 percent over the last year.
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