While layoffs on Wall Street dipped sharply in October, hiring fell for the third consecutive month, reflecting a mixed jobs outlook as bank executives remain nervous about low interest rates, lackluster commission revenue, feeble IPO volume, and growing regulatory pressure.
October 2016 Challenger, Gray & Christmas Report
According to the Challenger, Gray & Christmas Job Cuts Report, the financial services industry saw planned layoffs plummet 61% in October to 468 layoffs from 1,212 layoffs announced the previous month. The October 2016 layoff figure dropped to a level 66% lower than the 1,378 layoff total reported during the same month last year. Layoffs for the first ten months of 2016 totaled 19,387 or 13.6% below the total for the same period in 2015.
However, the picture was not so rosy for job seekers in October as new hiring plunged 67% to 200 new positions marking the third consecutive month where hiring dropped. New hiring in October was 92% below than the figure seen in the same month in 2015 when 2,400 jobs were available. Over the first ten months of 2016, new hiring totaled 3,676 new jobs — 92% below the 9,536 new jobs offered during the same period during 2015.
As you can see from the above chart, hiring eclipsed layoffs only once during the past ten months this year, reflecting that Wall Street employment has actually shrunk in 2016. In fact, since January 2015, net employment on Wall Street has actually contracted by 33,384 jobs as layoffs have consistently outpaced new hiring. This trend is consistent with our view that Wall Street executives are continuing to shrink their staffs as overall profits remain under pressure.
Wall Street Layoff Announcements
During October Dutch-based bank, ING announced that it was slashing 7,000 jobs in Belgium and the Netherlands as it focuses on providing improved online access in the face of growing competition. ING said that almost 3,500 full-time jobs would disappear in Belgium by 2021 and 2,300 in the Netherlands, while an additional 1,000 jobs would be lost at ING’s suppliers. Simultaneously, the company said it plans to invest 800 million euros ($899 million) in its “digital transformation in order to further improve customer experience.”
One day after Deutsche Bank announced that it was imposing a hiring freeze in an effort to reassure investors it had its expenses under control, the bank’s finance chief told staff that job cuts at the bank could be double what originally planned, a move which could slash another 10,000 jobs from payrolls. If this additional staff reduction takes place, roughly one in five of the bank’s workforce around the globe would be affected.
Just one week after reporting bullish 3rd Qtr 2016 financial results, Goldman Sachs announced it would eliminate another 20 employees, extending the bank’s deepest personnel cuts since the financial crisis. So far in 2016, Goldman has laid off at least 486 employees in New York, the most since 2009, when it shed more than 900 workers, according to layoff notices filed with the state. This round is an extension of previous cuts, which affected all parts of the bank, including brokerage and securities divisions.
Despite the plunge in layoffs in October, continued weakness in new hiring during the month reveals that management remains concerned about the difficult market conditions which are squeezing bank profits. These difficult conditions, on top of pending regulatory headwinds, lead us to believe that most investment banks and independent research firms are unlikely to significantly staff up their analytical teams or research sales operations in the near future.