The Wall Street employment picture deteriorated in May 2021 as layoffs surged more than 34% from the prior month, and new hiring plans declined 88% over the same period. As a result of these trends, layoffs exceeded new hiring for the first time since July 2020.
May 2021 Challenger, Gray & Christmas Report
According to the May Challenger, Gray & Christmas monthly Job Cuts Report released last week, the financial services industry saw planned layoffs rise 34% to 602 layoffs in May from 449 layoffs recorded during the prior month. The May 2021 layoff total was 39% lower than the 990 layoffs recorded during May of last year. During the first five months of 2021, layoffs total 4,959 layoffs, 32% below the 7,294 layoffs reported during the same period last year.
New hiring in May was much weaker than was seen in April as financial services firms announced that only 500 new jobs were available compared to 4,090 new jobs available during the prior month. The May 2021 hiring total was higher than the total seen during the same month of last year when no new jobs were available. During the first five months of 2021, new hiring totaled 14,911 new jobs – 742% higher than the 1,770 new jobs on offer during the same period last year.
As you can see from the above chart, monthly new hiring dipped below monthly layoffs for the first time since July 2020. Despite this one month drop, net employment continues to grow on Wall Street. Over the past twenty-four months net new employment in the financial services industry has risen by 14,150 jobs as bank executives are gradually expanding their overall headcount suggesting optimism about the improving economic outlook.
The modest rise in layoffs and sharp drop in new hiring that took place during May enabled monthly net employment at financial services firms to shrink for the first time since July 2020. Despite this one month deterioration in the Wall Street jobs outlook, we suspect the pickup in new hiring seen since the middle of last year should resume throughout the second half of 2021 as strong IPO activity, healthy trading commission volumes, and improved economic activity as the COVID vaccine becomes more widely available should boost bank earnings.
Despite this overall constructive outlook for overall Wall Street employment, we suspect that hiring by sell-side and independent research firms will remain weak throughout the remainder of 2021. This is due, in large part, to the buy-side’s unwillingness to increase their research payments to sell-side investment banks or independent research providers.