Wall Street layoffs fell in November from the prior month, while hiring plans surged during the month. The mixed jobs performance, however, does not alter the cautious outlook as many bank executives continue to worry about the impact of high U.S. inflation, continued Fed interest rate hikes, and the growing likelihood of a recession in 2023.
November 2022 Challenger, Gray & Christmas Report
According to the November Challenger, Gray & Christmas monthly Job Cuts Report released last week, the financial services industry saw planned layoffs surge 327% in November to 1,216 layoffs from 285 layoffs recorded in November of last year. The November 2022 layoff total was 20% lower than the 1,523 layoffs recorded in the prior month. During the first eleven months of 2022, layoffs totaled 17,571, 105% above the 8,568 layoffs reported during the same period last year.
New hiring in November rose 140% as financial services firms announced that 720 new jobs were available compared to 300 new jobs that were available in November 2021. The November 2022 hiring total was 104% higher than the 353 new jobs that were available during the prior month. During the first eleven months of 2022, new hiring totaled 21,561 new jobs – 3.6% lower than the 22,361 new jobs on offer during the same period last year.
As you can see from the above chart, monthly layoffs in November exceeded monthly hiring — the seventh time this has taken place in the past twelve months. Over the past twenty-four months net new employment (new hiring less layoffs) in the financial services industry has risen by 22,896 jobs as bank executives have gradually expanded their headcount – a trend that started in January 2021.
Despite the mixed November jobs data, net employment on Wall Street has declined in 4 of the past 5 months. It remains unclear whether this near-term trend will remain bearish in the next six to twelve months as inflation remains high, interest rates continue to climb, and the likelihood of an economic recession in the U.S. grows.
We suspect that this negative outlook for overall Wall Street employment will be evident in the research industry as sell-side and independent research firms limit their hiring over the coming 6-12 months. This is due to a range of factors, including the unwillingness of many asset managers to increase their research payments to their sell-side and independent research providers. This trend is likely to continue in 2023 as the SEC’s recent decision not renew its SIFMA “No Action” letter after July 2023 precludes EU-based asset managers from paying for US investment bank research using hard dollars. As a result, many EU asset managers will have to do without research produced by US domiciled research analysts.