The United States (US) job creation rate was last reported to be negative in September 2010. Month after month since then, US statisticians reported that US companies had created new jobs. Until September this year.
On Friday, October 6, these statisticians announced that the number of jobs in the US has decreased by 33.000. And that's actually good news for the American economy. How is that possible? The reason is that we have a very clear picture of where this decline comes from. It's not a mystery.
In September, quite a few states in the US were hit by the unprecedentedly heavy storms Harvey and Irma.
Checks not collected
The destruction was such that many people no longer had a place to work. Another consequence was that many American workers did not receive their salaries. In the United States, it is still often the case that employees do not receive their salary, but rather take a check home and then cash it at the bank. Because the storms disrupted daily life, many were unable to collect those checks (some businesses couldn't even write them). That also counts as job losses.
The fact that almost 1 million new jobs were created elsewhere in the US (in the same month) was not enough to compensate for the 'lost jobs'. Hence the negative balance of 33.000 jobs. In short: significantly more Americans were at work in September, but the number of new jobs is still negative. The negative figures are therefore largely a statistical phenomenon. The expectation is that the October jobs figure will correct this.
Hope is back
However, the above is not the only reason why the figure is actually good news. The unemployment rate has fallen to 4,2%. This decline is all the more impressive because an entire army of Americans reported en masse to the UWV offices in September.
This is important, because a person is only counted as unemployed from that moment on. The fact that so many Americans have registered means that unemployment must now rise. After all, we calculate unemployment as the number of job seekers divided by the total labor force. However, it still fell. This was because the number of 'real' new jobs (1 million) was greater.
Finally, the jobs report also shows that wage increases continue to increase. Compared to 1 year ago, wages were about 2,9% higher in September. That is good news for the American economy, because it means that wage increases are well above inflation. That, in turn, means that the purchasing power of the American worker is increasing. This usually means that he will also spend more, which will boost economic growth.
Additional jobs to be expected
These are clear indications that the American labor market is doing very well. In addition, repairing the tens of billions in heavy damage caused by the storms will create additional jobs in the near future. And yet it wouldn't be surprising if this causes the Fed to ease up on tightening the monetary reins.
The September jobs report has caused uncertainty. Will the number of new jobs actually recover in October and will that be enough to make you forget the month of September? It is very likely that the Fed will first want to wait and see how the situation develops before continuing to make monetary policy less loose.
We will know whether that happens on November 2, when the bank's interest rate committee will meet again.