Wall Street Jobs Outlook Sours in April

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Layoffs on Wall Street surged in April for the second consecutive month to the highest level seen since November of last year.  In addition, new hiring plans also dipped sharply in April to the lowest monthly hiring level since October of last year.  This data reveals that bank executives remain nervous about the earnings outlook given rising interest rates, weak cash equities performance, and the impact of increased regulatory pressures.

April 2018 Challenger, Gray & Christmas Report

According to the April Challenger, Gray & Christmas monthly Job Cuts Report, the financial services industry saw planned layoffs surge 81% to 2,148 layoffs from 1,187 layoffs announced in March, marking the highest monthly level of staff reductions seen since November of last year.  The April layoff figure represents a 253% rise from the 608 layoffs reported during April of 2017.  During the first four months of this year, layoffs totaled 4,476 – 13% lower than the total seen during the same period last year.

New hiring plans in April fell 70% as only 199 new jobs were available compared to the 655 new jobs announced in March.  Compared to the same month last year, new hiring in April rose modestly as no new jobs were available in April of 2017.  During the first four months of this year, new hiring totaled 7,854 new jobs — 253% higher than during the same period last year.

As you can see from the above chart, net employment on Wall Street (hiring – layoffs) has dipped sharply over the past two months. In fact, over the past twelve months, monthly layoffs have eclipsed new hiring plans in ten out of twelve months suggesting that bank executives remain uncomfortable with business prospects given rising interest rates, weak cash equities, and increased costs brought on by increased regulatory pressures.

Monthly Layoff Announcements

During April, Wells Fargo announced that it plans to lay off 593 employees at its Winterville North Carolina service center.  Employees are expected to receive a formal written notice of this in the next few months.  This layoff is a result of bank’s decision to close its Wells Fargo Auto, Corporate Finance, Corporate Risk, Enterprise HR Solution, Enterprise Information Technology, Marketing, Operations and Operational Risk and Compliance business units.

Deutsche Bank recently announced the layoff of 400 U.S.-based investment bankers, with the expectation of up to 1,000 U.S, employees being shed in a plan to cut more than 10% of U.S. jobs as it withdraws from businesses where it can’t compete.  Deutsche Bank management says it plans to reduce its activities in U.S. rates sales and trading and corporate finance. Areas where the investment bank still believes it can grow globally include foreign exchange, commercial real estate and structured equity financing.

Our Take

The April Challenger Gray & Christmas monthly job cut report reveals a souring Wall Street job outlook as layoffs surged to levels not seen since the 4th Qtr of 2017 and new hiring dipped to levels not seen since the Fall of last year.

As far as research hiring is concerned, we continue to believe that most investment banks and independent research firms will limit their staff additions, at least until they get more clarity about how MiFID II is impacting their research payments.  As we have mentioned recently, we suspect most firms won’t receive clarity on this point until the second half of the year.

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About Author

Mike Mayhew is one of the leading experts on the investment research industry. In addition to founding Integrity Research, Mike is on the board of directors of Investorside Research Association, the non-profit trade association for the independent research industry, and a frequent speaker on research industry trends and developments. Mike has over thirty years of research industry experience. Email: Michael.Mayhew@integrity-research.com

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