Friday’s Jobs Report: Looking for Hurricane Impact
With recent devastation from hurricanes across the South, Puerto Rico and the Virgin Islands, economists have been reading the tea leaves for broader economic impacts from the storms — and what they mean for jobs and hiring in the communities affected. Many of these areas are still struggling for basic needs, so the labor markets will be one of the last measures we examine for how people are impacted.
A month has passed since Hurricane Harvey made landfall in Texas and Louisiana, leaving whole cities without power and flooding thousands of homes and businesses. What kind of impact, if any, to the labor market can we see so far?
Beyond data from Glassdoor, this Friday, we’ll get the latest update on the labor market from the federal government as of September, which may have some clues. Overall, here’s what we’ll be watching for:
- 135,000 new jobs added to nonfarm payrolls in September;
- Unemployment rate down slightly to 4.3 percent;
- Average hourly earnings up 2.5 percent from one year ago;
- Labor force participation rate down slightly to 62.8 percent.
Hurricane Harvey dealt a devastating blow to workers and companies throughout the nation’s southeast, particularly in the fast-growing and dynamic Houston metro.
As the so-called “energy capital of the world,” Houston is home to more than 5,000 energy-related companies and boasts the nation’s sixth largest economy among U.S. metros. In late August, Houston residents suffered tremendously from Harvey’s flooding and storm damage, putting a significant dent in one of America’s most economically productive regions.
Estimates of the economic cost of Hurricane Harvey have been staggering. One recent estimate from Moody’s Analytics pegged the cost of the storm at $86 to $108 billion. That amounts to an economic burden of between $12,700 and $15,900 per capita among the Houston metro’s 6.8 million residents — enough to put a dent in the region’s economy this fall.
Following Hurricane Harvey, there was indeed a spike in new claims for unemployment insurance. That’s the first place weakness in the labor market will show up in the data, as laid-off workers file for unemployment benefits. New unemployment claims in Texas went from 12,100 to 63,700 in one week after the storm. Thankfully, since then claims in Texas have fallen back to about 20,000 per week as of September 23rd — still an elevated pace, and a worrying trend that’s worth watching in coming weeks.
The good news for Houston is that hiring has remained strong throughout the recent tragedy. Online job postings on Glassdoor today showed a slight dip following Hurricane Harvey, but have since recovered to above pre-storm levels. One week before Hurricane Harvey made landfall on August 21, there were 91,920 open jobs in Houston. One month later on September 2, there were 94,430 job postings, up more than 2,500 (see the figure below).
Although hiring in Houston remains strong, wages are still lagging behind the national average. In September, the Glassdoor Local Pay Reports showed median base pay was up just 0.7 percent from a year ago in Houston — less than half the national average of 1.8 percent. However, Houston’s slow pay growth is mostly due to continued low oil prices which have pulled down growth in the energy sector, although recent storms are likely to further weaken wage pressures in the area.
The Broader Jobs Picture
Nationally, we’re expecting to see moderate job gains in September’s jobs survey of 135,000 new jobs. That’s down slightly from the August pace of 156,000 new jobs added, partly reflecting the short-term impact of recent storm damage and partly reflecting the general slowdown in job growth we’re likely to see as the economy hits full employment.
In terms of the unemployment rate and wages, we expect to see more of the same in the September report: An unemployment rate down slightly to 4.3 percent, and average hourly wages up 2.5 percent from one year ago. Glassdoor Local Pay Reports show growing but sluggish wages at 1.8 percent year-over-year in September.
The end of September marks 99 months (or eight years and three months) for the current economic expansion that began back in 2009. During that expansion, we’ve had 84 consecutive months of positive job gains as of the end of September. That’s an all-time record since the 1930s — a remarkable period of growth and stability that appears likely to continue into the fall of 2017.
To speak with Dr. Andrew Chamberlain about this month’s jobs report or labor market trends, contact pr [at] glassdoor [dot] com. For the latest economics and labor market updates, subscribe to email alerts here and follow @adchamberlain.
 “Gross Domestic Product by Metropolitan Area, 2016,” U.S. Bureau of Economic Analysis, available at https://www.bea.gov/newsreleases/regional/gdp_metro/gdp_metro_newsrelease.htm.