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5 reasons the job market is stronger than you think

USA TODAY logo USA TODAY 11/3/2017 Paul Davidson

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At first glance, the 261,000 U.S. job gains in October seem disappointing.

They fell short of the 312,000 economists predicted when they anticipated a big rebound after Hurricanes Harvey and Irma depressed employment in September.

Yet here are a few signs the labor market is still healthy:

• Stronger prior months. Payroll gains for August and September were revised up by a substantial 90,000. Add that to the 261,000 and you get 351,000 additional jobs, quite a bit more than the 312,000 predicted.

• Hurricanes can skew the data. The jobs report is not a tally of actual employment gains but an estimate based on a survey that can be particularly squishy during extreme events, like storms. The result: a 90,000 upward revision for the prior two months, which included a 50,000 bump up for September -- when both storms affected payrolls. Similarly, there could be big revisions for October, as the Labor Department refines its assessment of the hurricanes’ impact.

• Suspiciously weak showings. Payroll growth in some industries looked suspiciously weak. Construction added just 11,000 jobs despite the start of rebuilding in Texas and Florida. Joe Brusuelas, chief economist for consulting firm RSM, says the figure “looks somewhat suspect” and he would not be surprised by a “significant upward revision to the data … In coming months.” Similarly, leisure and hospitality added 106,000 jobs after losing 102,000 in September, indicating that waiters and bellhops in Texas and Florida returned to work. But that suggests there were no net job gains in September and October for a sector that has been steadily expanding its workforce. Perhaps there will be more positive revisions there.

• More storm-impacted workers could return. While many people in Texas and Florida returned to work in time to be counted for the October jobs survey, others may still have been idled. For example, Goldman Sachs estimated the hurricanes reduced employment in the two states by 180,000. But it expected just 165,000 of them to be counted as employed in October. More returning workers would boost payrolls this month.

More temporary workers added In October. 18,000 temporary workers were added. That’s the largest increase in nearly two years, says economist Joe LaVorgna of Natixis. Employers typically hire contingent workers before bringing on permanent staffers.

More: U.S. economy grew briskly at 3% in third quarter despite Hurricanes Harvey and Irma

 

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