Hurricanes Harvey, Irma expected to dim US jobs growth in short term

Economists estimate that Harvey and Irma cut as many as 125,000 jobs from payrolls in September. (Reuters)
Updated 06 October 2017
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Hurricanes Harvey, Irma expected to dim US jobs growth in short term

WASHINGTON: US job growth probably slowed further in September as Hurricanes Harvey and Irma left displaced workers temporarily unemployed and delayed hiring, the latest indication that the storms undercut economic activity in the third quarter.
According to a Reuters survey of economists, the Labor Department’s closely watched employment report on Friday will likely show that nonfarm payrolls increased by 90,000 jobs last month after rising by 156,000 in August.
The projected job gains for September would be the second smallest this year and well below the 175,000 monthly average for the 12 months through August. They would follow on the heels of August’s disappointing employment growth, which economists blamed on a seasonal quirk.
Payrolls are calculated from a survey of employers, which treats any worker who was not paid for any part of the pay period that includes the 12th of the month as unemployed.
Economists estimate that Harvey and Irma, which wreaked havoc in Texas and Florida, cut as many as 125,000 jobs from payrolls in September.
“We are going to get a lot of the jobs back and we are going to see hiring related to the clean-up and rebuilding into early 2018 as well,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.
Economists say a weak employment report should not change views the Federal Reserve will raise interest rates in December. Fed Chair Janet Yellen cautioned last month that the hurricanes could “substantially” weigh on September job growth, but expected the effects would “unwind relatively quickly.”
The US central bank said last month it expected “labor market conditions will strengthen somewhat further.”
“Given this, we suspect the financial markets will also take any hurricane-related weakness to the September employment report in stride, maintaining an elevated probability for a December Fed interest rate hike,” said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina.
According to the Labor Department, the Texas and Florida areas affected by the storms employed 11.2 million people in March 2017, representing 7.7 percent of US employment.
Excluding the weather impact, economists say the labor market continues to tighten. The employment report would join August consumer spending, industrial production, homebuilding and home sales data in suggesting that the hurricanes will dent economic growth in the third quarter.
Economists estimate that the back-to-back storms, including Hurricane Maria which destroyed infrastructure in Puerto Rico last month, could shave at least six-tenths of a percentage point from third-quarter gross domestic product growth.
Growth estimates for the July-September period are as low as a 1.8 percent annualized rate. The economy grew at a 3.1 percent rate in the second quarter.
Harvey and Irma are not expected to have an impact on the unemployment rate, which is forecast holding steady at 4.4 percent for September. The smaller survey of households from which the jobless rate is derived treats persons as employed regardless of whether they missed work during the reference week and were unpaid as result.
The household survey could reflect the impact of the storms on employment by showing the number of workers who were stranded at home because of bad weather as well as those who were forced to work part-time.
There was probably no impact on the length of the average workweek from the storms.
“There are competing forces at play in September, where hours worked in many sectors will see shutdown-related cuts, while hours worked for clean-up and reconstruction efforts will get extended,” said Ellen Zentner, chief economist at Morgan Stanley in New York.
With the hurricane-driven temporary unemployment concentrated in low-paying industries like retail and leisure and hospitality, average wage growth is forecast picking up.
Average hourly earnings are forecast increasing 0.3 percent in September after rising 0.1 percent in August. Still, the annual increase in wages probably remained stuck at 2.5 percent for a sixth straight month.
Annual wage growth of at least 3.0 percent is needed to raise inflation to the Fed’s 2 percent target, analysts say.
Construction payrolls likely fell in September, bearing the brunt of the bad weather. Manufacturing employment is forecast increasing by 10,000 jobs after surging 36,000 in August, which was the most in four years.


Lebanon president: negative rumors about the economy harm country

Updated 19 September 2018
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Lebanon president: negative rumors about the economy harm country

  • Lebanon has been without a government for four months since a national election
  • “The Lebanese pound is not in danger and Lebanon is not on the road to bankruptcy," Aoun said

BEIRUT: Lebanon’s currency is not in danger and rumors about the economy are causing harm, President Michel Aoun said on Wednesday, amid concern that a political deadlock has blocked urgent reforms and left the heavily indebted country vulnerable.
Lebanon has been without a government for four months since a national election. The central bank has issued repeated assurances about the soundness of the Lebanese pound’s peg to the dollar and the size of its foreign currency reserves, in response to speculation over the currency’s future.
“The Lebanese pound is not in danger and Lebanon is not on the road to bankruptcy. The economic situation is difficult but the things being spread as rumors are harming Lebanon,” Aoun said, in comments published by his office.
“We do not deny that there is a crisis,” Aoun said, but added that the country was working to address it.
Lebanon had the world’s third highest debt-to-GDP ratio, at over 150 percent, at the end of 2017. The International Monetary Fund wants to see immediate and substantial fiscal adjustment to improve debt sustainability.
The failure of politicians to form a government needed to undertake the necessary reforms following the parliamentary election in May has added to concern for the economy.
Leaders from across the political spectrum have in recent months said the political stalemate is harming the economy and a government needs to be formed. Parliament Speaker Nabih Berri this month said the country was in “intensive care” and the economic situation was “very dangerous.”
While politicians have stopped short of saying the peg is in danger, some economic analysts abroad have been considering the possibility of a devaluation.
“Lebanon’s ongoing political stalemate has renewed market concerns over the country’s frail balance sheets which could propel the government to devalue the Lebanese Pound ... Under this scenario, the authorities would find it increasingly challenging to service their large foreign currency debts,” Japan’s MUFG Bank said in a report on Wednesday.