It's no surprise that Hurricanes Harvey and Irma caused the September jobs report to come in well short of expectations. Prior to September, the U.S. economy has averaged 172,000 new employees per month over the past 12 months. But because of the hurricanes, there was a decline of 33,000 employees in September.
A big part of this drop was the 105,000 drop in restaurant and bar workers, which makes sense because many of those establishments were temporarily closed in the heavily populated areas of Houston and Florida. It's likely we see this number rebound in October, as people go back to work.
While the number of new employees was affected by the weather, the government said the unemployment rate was not impacted (the number of new employees and the unemployment rate come from two different surveys). The unemployment rate improved to its best reading in over 16 years, dropping to 4.2%.
Other economic data last week support our view at Simply Money Advisors that the U.S. economy is healthy. A report on manufacturing, which hit a 13-year high, showed the industry is in very good shape. Meanwhile, a similar report on the services industry climbed to a 12-year high, pointing to future economic growth.
In corporate news, Procter & Gamble will have its annual shareholder meeting tomorrow (October 10th). We will learn whether activist investor Nelson Peltz has won a seat on P&G's board.
Peltz believes P&G’s sales and stock price are underperforming. To fix this, he’s looking to make many changes, including reorganizing P&G into three divisions: beauty and health care; home care; and baby, feminine, and family care. Peltz has also stated that he would like to see corporate management positions reduced down to 1,000.
P&G says it has already made many of the changes Peltz has suggested and believes Peltz will not add any value.
The vote to add Peltz to the board will be a close one, but it’s important to note that the top three shareholder advisory firms have thrown their support behind Peltz.
The Simply Money Point
The hurricanes have had a major impact on national economic data, but the real economy is still strong with little chance of a recession. As for here at home, Simply Money Advisors will keep you updated on the P&G vote outcome – you’ll be able to follow live updates all day on Tuesday, October 10th on our Facebook page.