New York (TIP)- While most US official economic data releases have been suspended until recently due to the government shutdown, Goldman Sachs Research’s analysis of alternative measures of US job layoffs suggests the labor market is weakening further.
“A sustained increase in layoffs would be particularly concerning because the hiring rate for workers is low and it is harder than usual for the unemployed to find jobs,” economists Manuel Abecasis and Pierfrancesco Mei write in the team’s report.
Private-sector layoff announcements reported by Challenger, Gray & Christmas increased in October to their highest level outside of recession (even after excluding the effect of an announcement of warehouse layoffs that our economists suspect is being partially double-counted). Outside of the large spike in layoffs involving warehousing jobs, the tech, industrial goods, and food sectors accounted for the largest increases in layoff announcements in October.
In addition, Goldman Sachs Research’s real-time tracking of Worker Adjustment and Retraining Notification (WARN), which companies have to file before conducting mass layoffs, has also ticked up, reaching its highest level since 2016 (outside of the initial pandemic surge).
By contrast, initial jobless claims—which are less noisy and more representative but could lag layoff announcements and WARN notices—remain low, Abecasis and Mei write.
Not all US states that Goldman Sachs Research tracks provide industry breakdowns of WARN notices. Our analysts combined machine learning techniques with a large dataset of company names, industries, and states to predict industry classifications for their WARN estimates.
The results suggest that technology companies also accounted for a meaningful increase in Goldman Sachs Research’s measure of overall WARN notices, followed by the manufacturing, healthcare, and food and beverage industries.
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