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Hurricanes hit US jobs as firms scale back hiring

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NEW YORK: US companies scaled back their hiring to an 11-month low in September after two powerful hurricanes disrupted some business activities, while the vast domestic services sector overcame those snags to expand at its fastest pace in 12 years. The latest data helped soothe investors who have been worried about Hurricanes Harvey and Irma dragging on US economic growth.


“We have to at least entertain the notion that an economy that was already in pretty solid shape cyclically is picking up momentum heading into the fall,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.


Total private employment rose by 135,000 net new positions for the month, the lowest level since October of last year, ADP said in a statement.


The result missed an analyst forecast of 160,000 new jobs. August was also revised downward by 7,000 to 228,000.


Mark Zandi, chief economist at Moody’s Analytics, which helps produce the report, said the effects of hurricanes Harvey and Irma were likely to be transitory.


“Hurricanes Harvey and Irma hurt the job market in September,” he said in a statement. “Looking through the storms the job market remains sturdy and strong.”


The storms wreaked havoc in Texas and Florida over a two-week period beginning in late August.


Ahu Yildirmaz, head of ADP’s research institute, also said small businesses had slowed hiring and possibly were not offering high enough wages to attract skilled workers.


Large businesses added 79,000 employees and medium-sized businesses, or those with between 50 and 499 workers, added 63,000 new positions. Small businesses contracted by 7,000 positions.


In the goods-producing sector, construction and manufacturing rose by a combined 47,000 positions but most of September’s gain, or 88,000 positions, was in the services sector.


Education, health care and hospitality gained 77,000 positions, partly offset by a 27,000-job contraction in transportation, utilities and information services.


Economists say the US is likely to see a rebound in hiring in the months after the storms, with reconstruction efforts causing a bump in demand for services and labour.Growth in the US services sector, a key driver of the American economy, hit a 12-year high last month in the wake of back-to-back hurricanes, a survey released on Wednesday showed.


The monthly gains surpassed analyst expectations and marked 93 consecutive months of expansion, according to the Institute for Supply Management.


ISM’s non-manufacturing index rose a strong 4.5 per centage points from August’s level to reach 59.8 per cent.


A reading above 50 per cent indicates growth. Analysts had predicted that September’s result would be the same as those from August.


The September reading was the highest since August of 2005, when the index hit 61.3 per cent. Hurricane Katrina wrought destruction in New Orleans at the end of that month.


Analysts said on Wednesday that rising chain store sales and deliveries in advance of the hurricanes had helped explain some of September’s bounce.


The business activity index rose 3.8 points to 61.3 per cent, the new orders index spiked by 5.9 points to 63 per cent and the employment index nudged up 0.6 points to 58.6 per cent.


According to the survey, 15 of 17 service industries reported growth, including retail, construction and financial services.


Meanwhile, the mining sector, as well as arts and entertainment, reported contraction.


The indices for supplier deliveries jumped 7.5 per cent and prices showed an 8.4 per cent gain.— Agencies


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