Transcripts

The Employment Picture Takes A Hit But Survives The Hurricanes

JEFF YASTINE: A better-than-expected employment report for September contained some better than expected news about the economy, especially in the wake of the hurricanes. While the U.S. lost just 35,000 jobs in September, the job numbers for July and August were revised upward. As Scott Gurvey reports, experts say that shows a labor market strong enough to withstand disruptions caused by the storms.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: The most important headline in today`s report on employment in September is what it says about employment in the two previous months. The Labor Department added 35,000 to the payroll employment number for July and 42,000 to August, indicating a much stronger economy before the hurricanes hit. The number for September does show a 35,000 job decline, the first decline since 2003. But some forecasters were looking for a drop of as much as 150,000. The separate survey of households found the unemployment rate to be 5.1 percent, up 0.2 percent from August. The Labor Department admits this report does not fully reflect the impact of the hurricanes. The reference period for both surveys occurred before hurricane Rita struck and difficulty in collecting data in the disaster areas meant lower then usual response rates. Most economists noted a negative impact but focused on indications of strength rather than weakness.

BRUCE KASMAN, CHIEF US ECONOMIST, JPMORGAN: You can see very sharp drops in the retail sector, in the hotel and restaurant industries and in important parts of the transportation sectors of the U.S. economy. So there were a lot of people who couldn`t work over the month of September because of the hurricanes. Those loses are likely to be temporary and when we look at the broader picture of job creation in the economy, net of that, it still looked like it was running at a very solid trend.

GURVEY: Bond traders had little reaction to the report, although most Fed watchers think the data almost guarantees the central bank will continue its policy of raising interest rates well into next year.

LAURENCE KANTOR, CHIEF ECONOMIST, BARCLAY`S CAPITAL: I think if anything the Fed is going to try and look through the storm effects. And if you look at all the labor market data we get, they actually look pretty strong, especially when you extract the effects of the storms. So whether it`s jobless claims when you take out hurricane effects there, they look like they`ve fallen. It looks like payroll employment, the pace of it has actually stepped up. The Fed`s going to keep hiking rates.

GURVEY: The Fed has raised interest rates at each of its last 11 meetings. It meets next on November 1. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.