While layoffs on Wall Street surged in September following an unusually low level reported in August, new hiring surged to the highest level seen in over 10 years. The mixed September jobs data, on top of a strong performance in August, suggests that bank executives are starting to see a light at the end of tunnel as bank earnings rebound from shutdowns brought on by the COVID-19 pandemic.
September 2020 Challenger, Gray & Christmas Report
According to the September Challenger, Gray & Christmas monthly Job Cuts Report released last week, the financial services industry saw planned layoffs surge over 3400% to 1,587 layoffs in September from an unusually low 45 layoffs recorded during the prior month. The September layoff figure represents a 6% drop from the 1,691 layoffs reported during the same month last year. Over the first nine months of 2020, 10,687 layoffs have been recorded, 45% lower than the 19,417 layoffs seen during the same period of last year.
New hiring in September surged 54% to 9,410 layoffs from the surprisingly high 6,118 new jobs reported in August. Both the August and September new hiring totals were the strongest monthly gains seen in this series in more than 10 years. The September hiring total was also considerably higher than the 0 new jobs available during the same month of last year. Over the first nine months of 2020, new hiring totaled 17,707 new jobs – 777% higher than the 2,020 new jobs on offer during the same period last year.
As you can see from the above chart, new hiring has eclipsed layoffs in both August and September – a trend that has caused overall employment levels to grow on Wall Street over the past two months. Over the past forty-eight months hiring has outstripped layoffs seven times – in March and May of 2017; In January and December of 2018; and in March, August and September of 2020. Consequently, over the past twenty-four months, net employment on Wall Street has declined by 17,136 jobs. This is a significant improvement from the trend seen in the past few years. While it is still too early to tell whether the overall employment outlook on Wall Street is finally turning around, the August and September data are clearly good news.
Specific Layoff Announcements
During September, Raymond James Financial announced that it is laying off more than 500 staff around the country, representing nearly 4% of its workforce, reducing the firm’s workforce to early 2019 levels. Company chairman and CEO, Paul Reilly said in a memo to staff that the company had already planned on “improving efficiencies” before the coronavirus pandemic, but was not anticipating “corresponding economic conditions and rate cuts that effectively wiped out half our earnings.”
Layoffs on Wall Street rose sharply while hiring also rose significantly during September. While it is clear that the overall jobs picture on Wall Street over the past two months is bullish, it would be premature to conclude that financial services executives have become more confident in their earnings outlook – particularly given historically low interest rates, huge loan loss reserves, and the uncertainty surrounding the overall business climate given the COVID-19 pandemic.
Despite these pressures, hiring at sell-side and independent research firms could be poised to rise in coming months as buy-side engagements with many research providers has surged during the COVID-19 pandemic. The increased buy-side demand for external research inputs could encourage asset managers to pay more for external research – a development we think should support sell-side and independent research firms to hire more analysts and research salespeople to support their customers.