New York, NY – According to Challenger, Gray & Christmas, Inc. planned layoffs at U.S.-based financial services companies rose 26% in October due to a continued slump in mortgage refinance activity which has crushed mortgage banking income.
Weak October CGC Report
In the past few weeks Challenger, Gray & Christmas’s monthly Layoff and Hiring report, revealed that layoffs for U.S. based financial services firms during the month of October totaled 8,717 – 26% higher than the 6,932 layoffs announced in the prior month. Additionally, the October layoff figure was over 10 times the level reported in the same month in the prior year.
October marked the fifth straight month that the number of layoffs at U.S. based financial services institutions totaled more than 1,000 – a clear sign that the employment conditions are deteriorating at U.S. based financial services companies. Worse yet, the number of layoffs at US financial services companies has increased every month from the low seen in May 2013.
In addition, hiring plans for the financial services industry remain weak. The October report shows that U.S. based financial services firms plan to hire only 150 new employees – a total that is worse than the 225 total seen in the prior month, as well as the figure seen during the same month of the previous year.
On a year-to-date basis, financial services layoffs are currently running well above last year’s pace. Through the first 10 months of 2013, employers have announced 57,591 job cuts, 102% higher than the 28,450 cuts announced between January and October 2012.
Hiring plans for the January through October period also reveal a weak financial services employment market. For this period in 2013, hiring plans are 63% lower than they were for the first ten months of 2012.
Layoff Announcements Widespread
The depressing data released by Challenger, Gray & Christmas is a result of weakness at a large number of financial services institutions as mortgage refinance activity has slowed across the country. This has had a negative impact in the mortgage divisions of many banks.
A few of the financial institutions that have announced the largest layoffs in October include Bank of America (1,300 layoffs), Wells Fargo (925), SunTrust (800), Mortgage Investment Corp. (476), and Capital One (200).
The Bank of America announcement is part of management’s goal of reducing headcount at the global bank by close to 4,000 heads during the 4th Quarter of 2013.
The bearish October report from Challenger, Gray & Christmas, on top of increasingly weak reports seen over the past few months, suggest that employment conditions in the U.S. financial services industry remain extremely weak. Unfortunately, there is very little reason for senior management at financial services companies to reverse their cautious outlook anytime in the near future. Consequently, we don’t expect a pickup in hiring activity or a reduction in layoffs any time before year-end.