US economy rebounds after season of hurricanes
Despite a loss of nearly 33,000 jobs due to fall storms, the Department of Labor reports solid growth in many sectors including construction, hotels, restaurants, and the auto industry, many of which took the brunt of the impact during hurricanes Harvey and Irma.
Washington—US job growth is expected to have soared in October in the aftermath of hurricanes Harvey and Irma as hotels and restaurants in Florida and Texas reopened and rebuilding and repair work began.
Economists have forecast that the government's jobs report being released Friday morning will show that employers added 310,000 jobs last month, according to a survey by data provider FactSet. That would be the highest monthly gain in two years. Yet the hiring surge will largely reflect a short-lived rebound from September, when hurricane-damaged and flooded businesses closed and the overall economy shed 33,000 jobs.
If the economists' projection for October proves correct, the average job gain for the prior three months would be nearly 150,000, a solid level. That is roughly in line with the average pace of hiring in the first eight months of this year, before the storms hit.
The unemployment rate is projected to remain 4.2 percent, the lowest in 16 years.
The Labor Department will release the report at 8:30 a.m. Eastern time.
Even with the economy in its ninth year of recovery from the Great Recession, hiring remains solid and growth is healthy. For the first time since the downturn, the global economy is broadly improving, with all major advanced economies expanding at the same time. The value of the dollar has slid since earlier this year, a move that makes US goods less expensive overseas. Those trends are lifting US exports and boosting the profits of American multinational corporations.
Hiring may have been robust last month in construction, restaurants, and hotels. According to a survey by the payroll processor ADP, construction companies added 62,000 jobs in October, the most in a decade and likely reflecting the start of rebuilding.
In September, hotels and restaurants shed 105,000 jobs, a bigger monthly loss than occurred even during the Great Recession. The hurricanes and widespread flooding in Florida shut down thousands of businesses. But most businesses have since reopened, and economists expect a solid rebound in hotel and restaurant jobs.
Americans are also sounding more optimistic about the economic outlook, which could prompt more people to open their wallets in the coming months. Consumer confidence reached its highest level in nearly 17 years in October, according to the Conference Board.
Auto sales have also jumped since the hurricanes as people replace damaged and destroyed cars. Replacement auto sales helped lift overall consumer spending by the most in eight years in September. Still, that is likely to be a temporary economic boost.
The economy expanded at a 3 percent annual rate in the July-September quarter, after a 3.1 percent gain in the second quarter. That was the best six-month showing in three years.
Paychecks are also picking up a bit, which could fuel further growth. Average hourly pay rose 2.9 percent in September from a year earlier, though that figure was likely inflated by the impact of the hurricanes. It is up from the 2 percent to 2.5 percent pace of the past five years. Still, pay typically rises at a 3.5 percent annual rate in a healthy economy.
This story was reported by The Associated Press.