You can blame much of the U.S. labor market's first contraction in seven years on Hurricanes Harvey and Irma.
The tropical storms, ironically, are also among the reasons that economists say the loss of 33,000 jobs in September won't keep the Federal Reserve from delivering on its third interest-rate increase this year: Central bankers expect the drop to be temporary.
Indeed, numbers were dragged down sharply by a drop of 105,000 jobs in restaurants and bars, likely reflecting the closings during the tropical storms, which flooded large swaths of Houston and hammered coastal Florida. Those positions will return as electricity is restored and damage repaired, economists expect, and demand for construction workers may even cause a temporary spike in growth.
While the Fed will be looking for data to confirm that expectation, members of the central bank's monetary policy committee "will chalk this up as temporary" for now, Joseph Song, an economist with Bank of America Corp. (BAC) - Get Report said in a telephone interview on Friday, Oct. 6.
A drop in the unemployment rate to 4.2%, the lowest in 16 years, and expanding payroll growth -- even if it doesn't remain as high as the 2.9% reported in September -- should help "keep the Fed on track for another rate hike," Song explained.
That increase would take short-term rates to a range of 1.25% to 1.5%, as the central bank slowly works toward more typical levels following seven years of near-zero rates after the 2008 financial crisis.
That's important for banks from Citigroup Inc. (C) - Get Report to JPMorgan Chase & Co. (JPM) - Get Report and Goldman Sachs Group Inc. (GS) - Get Report , which typically bolster returns by passing along rate hikes more quickly to borrowers than depositors and have benefited from the four increases since late 2015.
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Both Bank of America and British lender Barclays Plc maintained their forecasts that the Fed will move in December. The central bank will "look at the extent of the rebound in October and the coming months beyond for further confirmation" that the September decline was only temporary, Barclays economists said in a note.
Mark Hamrick, senior economic analyst at Bankrate.com, concurred.
"The first thing that comes to mind here is the scene in 'The Wizard of Oz,' where we hear the line 'pay no attention to the man behind the curtain,'" he said in an e-mailed statement. "Because of the impacts from hurricanes and flooding, the decline reported in September payrolls doesn't carry weight this time around."
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Editors' pick: Originally published Oct. 6.