Wall Street layoffs dipped in April 2022 from extremely high levels in the prior month, but still remained weak compared to recent history. Simultaneously, April new hiring plans rose modestly. Consistent with April’s mixed jobs data, high inflation, geopolitical tensions, and volatility in the financial markets has caused many bank executives to remain cautious about their near-term business outlook.
April 2022 Challenger, Gray & Christmas Report
According to the April Challenger, Gray & Christmas monthly Job Cuts Report released last week, the financial services industry saw planned layoffs plunge 41.7% to 2,772 layoffs from 4,755 layoffs recorded in March. Despite the April decline, monthly layoffs remained at the second highest monthly level since December, 2019. The April 2022 layoff total was 517% higher than the 449 layoffs recorded in April of 2021. During the first four months of 2022, layoffs totaled 8,675, 99% above the 4,357 layoffs reported during the same period last year.
New hiring in April was modestly stronger than what was recorded in the prior month as financial services firms announced that 200 new jobs were available compared to 110 new jobs available in March 2022. The April 2022 hiring total was 95% lower than the total seen during April 2021 when 4,090 new jobs were available. During the first four months of 2022, new hiring totaled 3,452 new jobs – 76% lower than the 14,411 new jobs on offer during the same period last year.
As you can see from the above chart, monthly layoffs in April exceeded monthly new hiring for the second month in a row, and the third time in the past five months. Over the past twenty-four months net new employment (new hiring less layoffs) in the financial services industry has risen by 26,063 jobs as bank executives have gradually expanded their headcount – a trend that started in February 2021.
Specific April Industry Layoffs
During April, San Francisco-based Wells Fargo & Co. announced that it expected to lay off an undisclosed number of employees in their home lending department. Some reports suggest that Wells Fargo’s layoff will include 550 mortgage processors. This workforce reduction is due, in large part, to a recently disclosed 33% plunge in mortgage origination volume during the 1st Qtr 2022.
This drop reflects the end of the mortgage refinance boom, a development which has prompted layoffs at other mortgage firms including Blend, Better.com, PennyMac, Interfirst, and Guaranteed Rate.
Our Take
While it is too early to tell, the fact that net employment on Wall Street has fallen in three of the past five months could foreshadow continued weakness in employment over the near term, particularly as high inflation and geopolitical tension creates uncertainty about the near-term economic outlook.
We suspect this cautious outlook for overall Wall Street employment will impact the investment research industry as sell-side and independent research firms restrain hiring throughout the remainder of 2022. This is due, in part, to the unwillingness of many asset managers to boost their research payments to their sell-side or independent research counter-parties as many of them now pay for third-party research out of their own pockets or from falling research budgets.