Goldman Sachs warns that the labor market could face further pressure as cracks begin to appear in economic data. While the unemployment rate is still around 4%, the market received a shock after May and June’s nonfarm payrolls were revised lower by a combined 285,000 jobs.
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“Our estimate of trend job growth is now clearly below even that low bar at 30k per month,” wrote Goldman Sachs economic analysts David Mericle and Jessica Rindels. “Future revisions to job growth are more likely to be negative.”
Employment Growth Faces Policy and Market Constraints
Goldman also cited more restrictive immigration policies, less growth in healthcare and education jobs, and parts of the labor market locked out from new jobs as points of concern. Recent labor market data has suggested that companies are retaining employees while remaining cautious about expanding their headcount.
Upcoming policies could also be detrimental to the labor market. These include fewer student visas, a reduction of government jobs, and the status of protected immigrants at risk.
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