Mixed Wall Street Jobs Outlook for February

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Wall Street layoffs plunged in February to hit 3,618 layoffs following a January level which was the highest monthly layoff total since September 2018.  On the other hand, hiring plans remained weak in February as no new jobs were available for the third consecutive month.

February 2024 Challenger, Gray & Christmas Report

According to the February Challenger, Gray & Christmas monthly Job Cuts Report released last week, the financial services industry saw planned layoffs plunge 45.5% to 3,618 layoffs from 6,632 layoffs recorded in February of last year.  The February layoff total fell 84.4% from the surprising high January mark when 23,238 layoffs were recorded.  Layoffs over the first two months of the year have totaled 26,856, 55.8% higher than the total seen during the same period of 2023.

New hiring in February 2024 remained plunged as financial services firms announced that no new jobs were available compared to 4,100 new jobs that were available in February 2023.  The February 2024 hiring total was unchanged from the level recorded during the previous two months.   Over the past twelve months, no new jobs were recorded in five different months, an indication that bank executives remain cautious about expanding their headcount.

As you can see from the above chart, even though monthly layoffs plunged in February, layoffs continue to run above hiring.  In fact, layoffs have exceeded hiring for the eleventh time in the past twelve months.  Over the past twenty-four months average net employment (new hiring less layoffs) in the financial services industry has actually shrunk by 10,058 jobs as bank executives continue to shrink their headcount.

Specific February Job Cut Announcements

In early February, Deutsche Bank announced that it plans to cut 3,500 jobs in “non-client facing areas” as part of a 2.5 bln euro operational efficiency program.  The announcement came during the bank’s 4th Qtr 2023 earnings report when Deutsche Bank announced that net profit was 1.3 bln euros – almost 30% below the net profit figure reported a year earlier.

During February, global investment bank Morgan Stanley announced that it was planning to cut less than 1% or 300 employees from its wealth management division in a cost savings measure.   The company says it plans to cut managing directors as well as other non-customer-facing employees.  The layoffs are being implemented due to redundancies that arose from the $13 billion acquisition of E*Trade in 2020.

During the latter part of the month, global investment bank Citigroup said that it will lay off 286 employees from its various New York operations.  The bulk of these layoffs are expected to originate from Citi’s banking subsidiary, while a few will come from the broker-dealer unit.   These layoffs are part of Citigroup’s planned 20,000 staff reduction over the next two years that the bank announced in January.  Citi is aiming to reduce its global workforce by roughly 8% through 2026.

Our Take

Although layoffs plunged during February, new hiring has stalled in recent months and net employment on Wall Street has fallen eleven times in the past twelve months.  We suspect this weak jobs outlook will continue through the rest of the first half of 2024 as inflation continues to be sticky, interest rates remain high, and geopolitical tensions put a damper on near-term economic activity. 

This bearish outlook for overall Wall Street employment should be evident within the research industry as sell-side and independent research firms restrict their hiring over the coming 6-12 months.  This is due to the unwillingness of most asset managers to boost their research payments to their sell-side and independent research counterparties.  In addition, the SEC’s decision to allow its SIFMA “No Action” letter to lapse last year should dampen EU asset managers’ research payments to US investment banks and brokers.  This factor should continue to put pressure on sell-side research payments well into the second half of 2024 when hopefully the EU can establish a workaround.

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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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