The employment outlook on Wall Street remains fragile as layoffs surged in April to the highest level seen since late last year and new hiring remained restrained reflecting continued caution on the part of Wall Street executives.
April 2016 Challenger, Gray & Christmas Report
According to the Challenger, Gray & Christmas Job Cuts Report for April, the financial services industry saw planned layoffs surge 185% to 2,847 layoffs from 998 layoffs announced in March. The April 2016 layoff figure hit a level 275% higher than the 758 layoff total reported during the same month last year. Despite the surge in layoffs in April, layoffs for the first four months of 2016 totaled 5,849 or 37% below the total for the same period in 2015.
During April, new hiring remained tepid at 200 new positions available, the same as the total seen in the previous month. New hiring in April was higher than the figure seen in the same month in 2015 when no new jobs were available. Over the first four months of 2016, new hiring totaled 700 new jobs — 78% below the 3,200 new jobs offered during the same period during 2015.
As you can see from the above chart, the gap between hiring and layoffs on Wall Street is clearly widening, reflecting the fact that that overall employment in the financial services industry continues to be shrinking. This development is consistent with our view that Wall Street executives are trying to shrink staffing levels as profits remain under pressure.
Wall Street Layoff Announcements
During April, Societe Generale said they were planning to cut 128 jobs at their Global Banking & Investor Solutions division. Management did not give a timeframe for the staff reduction. The job cuts are part of a bank-wide cost-savings plan announced initially in 2015.
Japanese investment bank Nomura announced that it is planning to slash hundreds of jobs in its European and US operations as it shuts down parts of its European equities business, including research, equities derivatives and underwriting. It is understood that up to 600 jobs are at risk. Company management said this cut is part of a plan to “rationalize certain areas” of its European and US businesses.
Australia’s Macquarie Group said that it plans to eliminate close to 15% of its U.S. investment banking workforce as it merged several industry groups in its investment banking division. The industrials group was disbanded and some chemicals bankers joined the infrastructure team. The consumer group was merged with the gaming and leisure group, while the healthcare services information technology group was absorbed by the technology, media and telecommunications group.
San Francisco-based investment bank, Wells Fargo said last month that it is laying off 251 mortgage employees across the country due to a drop in delinquency and foreclosure rates and slumping demand to refinance mortgages. These cuts come as a number of mortgage lenders nationwide continue to shrink staffing in units that dealt with foreclosed borrowers.
The surge in layoffs and weakness in new job openings on Wall Street during April reveals that investment banks and brokerage firms are continuing to cut expenses and are unwilling to replace staff when job openings become available. This trend, combined with the recent finalization of MiFID II language forcing sell-side firms to put a price on their investment research for the first time, leads us to conclude that most investment banks and independent research firms won’t be aggressively hiring research staff over the near-term.