September "Hurricane" Payrolls Tumble 33,000, First Drop In Seven Years, As Wages Surge Due To Labor Shortages

As noted earlier, Wall Street was completely clueless ahead of today's payroll, with most expecting a small positive print but two brave forecasters went so far as to predict that the recent hurricanes would result in a negative print, and sure enough, moments ago the BLS reported that in September, the US economy lost 33,000 hurricane distorted jobs, the first payrolls decline since September 2010.

While the September number was expected to be noise, the historical revisions were more problematic: total nonfarm payroll employment for July was revised down from +189,000 to +138,000,  while August was revised up from +156,000 to +169,000. With these revisions, employment gains in July and August combined were 38,000 less than previously reported. After revisions, job gains have averaged  91,000 over the past 3 months.

Offsetting the poor headline print from the Establishment survey, according to the BLS Household Survey, the number of employed Americans soared by 906,000 to 154.435 million, a sharp 1.6% jump from the year prior.

The BLS also reported that the unemployment rate tumbled  from 4.4% to 4.2%, on expectations of no change...

... as some 1.47 million people were not at work due to bad weather. This is how the BLS explained it:

In September, 1.5 million workers had a job but were not at work for the entire reference week due to bad weather, the highest level for this series over the past 20 years. This series is highly sensitive to the timing of weather events and thus does not capture the immediate effect of all such events on the job market.

Meanwhile, as jobs tumbled, the labor shortage created by the hurricanes pushed wages sharply higher as we had previewed, and as the BLS confirmed moments ago: in September, average hourly earnings rose by 0.5% M/M, above the 0.3% expected, and far above the 0.2% in August, while on an annual basis, the increase was an outlier 2.9%, also well above the 2.5% expected, and the highest since the financial crisis.

As a result of the spike in wages, the odds of Fed hike by year-end have climbed above 75% for the first time. Which, of course, is precisely as Bloomberg's David Finnerty said earlier:

"Any weakness will be attributed to hurricanes, while a beat on payrolls or wages would be seen as supporting a Federal Reserve interest rate increase in December."

Sure enough that's precisely how the market reacted.

Commenting on the Hurricane impact, this is what the BLS said:

In September, a sharp employment decline in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Irma and Harvey.


The storms caused large-scale evacuations and severe damage to many homes and businesses. In the establishment survey, employees who are not paid for the pay period that includes the 12th of the month are not counted as employed. Many employees in areas affected by the hurricanes were likely off payrolls during the reference pay period for September.


Our analysis suggests that the net effect of these hurricanes was to reduce the estimate of total nonfarm payroll employment for September. There was no discernible effect on the national unemployment rate. No changes were made to either the establishment or household survey estimation procedures for the September figures. For both surveys, collection rates generally were within normal ranges, both nationally and in the affected states. In the establishment survey, employees who are not paid for the pay period that includes the 12th of the month are not counted as employed. In the household survey, persons with a job are counted as employed even if they miss work for the entire survey reference week (the week including the 12th of the month), regardless of whether or not they are paid. For both surveys, national estimates do not include Puerto Rico or the U.S. Virgin Islands.       

Elsewhere, the participation rate rebounded from 62.9% to 63.1% as the number of people not in the labor force shrank by 368,000 to 94.417 million even as the number of employed Americans surged by over 900,000.

Some more details from the report:

Total nonfarm payroll employment was little changed in September (-33,000), after adding an average of 172,000 jobs per month over the prior 12 months. In September, a steep employment decline in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Irma and Harvey. Employment rose in health care and in transportation and warehousing.

Employment in food services and drinking places dropped sharply in September (-105,000), as many workers were off payrolls due to the recent hurricanes. Over the prior 12 months, food services and drinking places had added an average of 24,000 jobs per month.

In September, health care added 23,000 jobs, in line with its average monthly gain over the prior 12 months (+27,000). The employment increase in ambulatory health care services (+25,000) was partially offset by a decline in nursing care facilities (-9,000).

Employment in transportation and warehousing increased by 22,000 in September. Job gains occurred in warehousing and storage (+5,000), couriers and messengers (+4,000), and air transportation (+3,000).

Employment in financial activities changed little in September (+10,000). A job gain in insurance carriers and related activities (+11,000) largely reflected hurricane-recovery efforts. The gain was partly offset by losses in activities related to credit intermediation (-4,000) and in commercial banking (-3,000). Over the year, financial activities has added 149,000 jobs.

In September, employment in professional and business services was little changed (+13,000). Over the prior 12 months, job growth in the industry had averaged 50,000 per month.

Manufacturing employment was essentially unchanged in September (-1,000). From a recent employment trough in November 2016 through August of this year, the industry had added an average of 14,000 jobs per month.

Employment in other major industries, including mining, construction, wholesale trade, retail trade, information, and government, showed little change over the month.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in September. In manufacturing, the workweek also was unchanged at 40.7 hours, and overtime held steady at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.6 hours. (See tables B-2 and B-7.)

In September, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents to $26.55. Over the past 12 months, average hourly earnings have increased by 74 cents, or 2.9 percent. In September, average hourly earnings of private-sector production and nonsupervisory employees increased by 9 cents to $22.23. (See tables B-3 and B-8.)

The change in total nonfarm payroll employment for July was revised down from +189,000 to +138,000, and the change for August was revised up from +156,000 to +169,000. With these revisions, employment gains in July and August combined were 38,000 less than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 91,000 over the past 3 months.


GUS100CORRINA Manthong Fri, 10/06/2017 - 09:29 Permalink

Add Hurricane NATE to the line-up as well as elevated risk of geological event in the midwest and western USA. Heads up: The WATER in the MIGHTY MISSISSIPPI RIVER is DISAPPEARING for some unknown reason.Also, there are reports of meteors being a possible root cause of forest fires at various spots around the world including the USA.Of course, all of this stuff started right after the SOLAR ECLIPSE was seen across the USA. As Indiana Jones would say: X marks the SPOT! For many who have lived in NORTH AMERICA and the CARRIBEAN for the last 40 days, it has literally been HELL ON EARTH!!Sign from YHWH Elohim? Inquiring minds want to know. Think about it.

In reply to by Manthong

spastic_colon Haus-Targaryen Fri, 10/06/2017 - 09:46 Permalink

this is so easy to see; the october fed meeting is the end of the month with the normalization announcement on 11/1 and then a couple days later we get the biggest revision in history to show 300k jobs to offset the start of balance sheet "normalization"......its not like this is scripted or this month was only lucky they had an excuse to report a real number; its sad when reality has to be explained away.nobody seems to ask why the number was so terrible that 1 states reporting could make it go negative.

In reply to by Haus-Targaryen

GreatUncle LawsofPhysics Fri, 10/06/2017 - 09:26 Permalink

The QE was always there if creating money by the banks is ever considered to be QE.Their problem now ... what once needed 2% money creation is now way, way bigger and it is not going away.So you end up with statistical manipulation in everything to pretend the economic model works when the truth is it has not worked for decades if ever.The other point now is they own everything ... NOT MY FUCKING FAULT IF THE ECONOMY COLLAPSES ... got to blame all those that own everything.They do not have that get out of jail card, they only have the double down card for as long as it can be played.

In reply to by LawsofPhysics

Bigly GlassHouse101 Fri, 10/06/2017 - 08:51 Permalink

This is all unmitigated crap!We do not have a 4% ue rate!!!! And the people who have a job make 50% of what they did 20 years ago, adj for inflation. The only ones who are keeping up with inflation....maybe the top 2%. But they are not high on their hogs for long because the black hole that is the fed and the top .005% will suck up every last remaining asset.

In reply to by GlassHouse101

LawsofPhysics Fri, 10/06/2017 - 08:38 Permalink

Wow, this simply confirms that rates really should have been going up back in 2010...Perhaps we should not have bailed out all those corrupt fuckers in banking anf finance after all..."Full Faith and Credit"

scubapro Fri, 10/06/2017 - 08:41 Permalink this means that to get to the 'normal'/great jobs growht of 180k/month (which is below the growth in the workforce each month btw)....october should see nearly 400k...anything under 300k would indicate a net weaker situation.   hourly rates climb b/c --if working post hurricane, while white collar is home b/c the computers are down, blue collar hourly people who CAN work now get paid bank.  putting storm shutters up $375....two days before the storm $675...then ALL want them down at the same time, two guys can do 5-10 houses a day. 

ejmoosa Fri, 10/06/2017 - 08:42 Permalink

111k jobs lost in leisure and hospitality...Profits have been under duress in the restauarant sector for more than four quarters.Why would anyone be surprised they are going to shed jobs to return to profitable growth?

Dilluminati Fri, 10/06/2017 - 08:47 Permalink

When this economy has the punch bowl pulled away, the next round of deflation will be so severe, and most don't see it coming.  8 years no wage growth, the next down-wave is going to be something that makes 2008 look small.The lack of quality employment, companies skirting healthcare, consumers squeezed by it, the next show down.. going to be proof "that nobody could understand" why wages didn't increase?  And oh.. we can't find skilled people for the job, and finally the greatest challenge: how to find somebody smart enough to do a job and dumb enough to take it.It's ugly out there and this is what failure looks like, this is what failed institutions look like.