Job loss warning: Goldman Sachs sees 10,000 layoffs monthly as oil prices surge

A fresh warning from Goldman Sachs is raising concerns about the U.S. job market. Rising oil prices are now expected to ripple across the economy. Economists say the effects won’t be limited to fuel costs alone.
Instead, hiring could slow and unemployment may begin to climb in the months ahead.

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Why are oil prices impacting jobs?

Higher oil prices don’t just affect fuel, they tend to push up costs across the economy. As prices rise, consumers often cut back on spending in other areas, which can slow business activity, as per a report by Business Insider.

In its baseline scenario, Goldman said the oil shock could reduce job growth by roughly 10,000 positions each month through the end of the year.

“The upward pressure on unemployment primarily reflects lower hiring, with a smaller contribution from higher layoffs, in industries most exposed to weaker consumer spending,” the economists wrote.

Which industries could see the biggest losses?

The slowdown is expected to hit consumer-driven sectors the hardest. Goldman highlighted leisure and hospitality as particularly vulnerable, estimating the sector could lose about 5,000 jobs per month through the end of the year, as per a report by Business Insider.

Retail trade, manufacturing, and education and health services were also listed among the most affected areas.

While energy companies may benefit from higher oil prices, the bank noted that job gains there could be limited. Increased efficiency in oil extraction means fewer workers are needed than in the past.

What is happening to the unemployment rate?

The broader labor market is already showing signs of cooling. Goldman expects the unemployment rate to rise to 4.6% by the end of the third quarter.

Recent data shows unemployment has already ticked up to 4.4% in February, while the economy lost 92,000 jobs, according to the latest nonfarm payrolls report.

The slowdown follows a sharp drop in job growth compared to the previous year. After revisions, the U.S. added 181,000 jobs last year, down significantly from 1.4 million the year before, as per a report by Business Insider.

With markets already uneasy about the economic impact of the Iran conflict and rising oil prices, Goldman’s outlook suggests the pressure on hiring could continue building in the months ahead.

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FAQs

How many jobs could be affected?
Around 10,000 fewer jobs could be added each month.

Which sectors may be hit hardest?
Leisure, hospitality, retail, manufacturing, and services.