A P R I L 2 4, Securities Industry Employment Update. By: Paul Rainy. Volume IV No. New York n Washington n London n Hong Kong

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1 Research REPORT A P R I L 2 4, Securities Industry Employment Update By: Paul Rainy Volume IV No. 5 New York n Washington n London n Hong Kong

2 Summary SECURITIES INDUSTRY EMPLOYMENT UPDATE The U.S. Department of Labor s Bureau of Labor Statistics (BLS) estimated that national securities industry employment decreased by 0.8 percent in March and 3.4 percent in the first quarter of Securities industry employment in New York State and New York City decreased in March by 1.4 percent and 1.8 percent, or 2,700 and 3,100 jobs, respectively. For the first quarter, New York State and New York City securities industry employment decreased by 6.0 percent and 5.1 percent, or 12,000 and 9,100 jobs, respectively. U.S. Employment National securities industry employment reached a record high of 869,600 jobs in second quarter 2008, but has since contracted by 6.6 percent, or 57,600 jobs, to 812,000 by the end of the first quarter of In March 2009, the U.S. securities industry headcount decreased by 6,600 jobs, or 0.8 percent, from the previous month. The U.S. economy remained weak in the first quarter of 2009, losing approximately 5.1 million jobs since the recession began. Two-thirds of these job losses occurred in the past five months. With consumer spending declining, house prices falling, the number of corporate and personal bankruptcy filings rising, and the national unemployment rate reaching a 26-year high of 8.5 percent in March, 2009 will continue to be very difficult for consumers and businesses. Securities industry employment in the U.S., as well as in the larger financial services industry, continues to be particularly impacted by the credit crisis, affected by consolidation of the financial sector. According to Bloomberg, 7,730 jobs were lost in the first quarter of 2009 in the U.S. banking/brokerage industry, for a total of 156,030 jobs lost since the recession began in December Despite current economic woes, several economists have predicted that the U.S. economy will begin to recover sometime in the second half of A few economic indicators suggest the U.S. economy has begun to level off. Sales of new and existing homes increased in February 2009 over the previous month, with buyers taking advantage of record-low mortgage rates, higher levels of affordability, and homebuyer tax credits. Current homeowners continue to take advantage of low mortgage rates by refinancing their homes, aided in part by President Obama s Making Home Affordable program introduced in early March. According to the Federal Reserve Beige Book release in mid-april, the pace of decline in manufacturing activity, consumer spending, and the real estate market slowed or showed slight improvement in some regions, although employment continues to remain weak. Consumer confidence remains at near historic lows, but slightly increased in March. Total retail sales decreased by 1.1 percent in March; however, sales increased in the two previous months. Another positive sign, beginning March 9, was that the U.S. stock markets rallied for six straight weeks, aided by stronger-thanexpected first quarter results from a number of large financial institutions. 1 2 BLS securities employment numbers are comprised of the total number of people on the payroll on the week of the 12 th of every month, including those whose layoffs have been announced but are not yet effective and temporary workers hired in-house by the firm; as such, employment numbers may not accurately reflect the ongoing layoff announcements within the securities industry and larger financial sector. Recent national, state and city employment figures are all preliminary and subject to revision. For more information about data collection, please contact the Bureau of Labor Statistics at ( SIFMA s Economic Outlook, December 15, 2008, ( 1

3 Although national securities industry employment recovered from the prior downturn, gaining 118,600 jobs in the 57 months following the October 2003 nadir of 751,000 jobs, it remains to be seen whether the current downturn in securities employment will recover similarly. Source: Bureau of Labor Statistics (BLS), U.S. Department of Labor Source: BLS (Year-end data) 2

4 New York State Employment BLS estimated that the securities industry headcount in New York State decreased by 1.4 percent, or 2,700 jobs in March, bringing the number of securities industry positions down to 188,500 from February s level of 191,200. For the first quarter of 2009, New York State securities industry employment decreased from the previous quarter by 3,700 jobs, or 1.9 percent. Source: BLS The 28-month job recession that followed the 2000 peak reduced the industry s New York State headcount by 19.5 percent, or 42,200 jobs, before ending in April 2003 at an employment level of 174,500. Since then, employment regained nearly 92 percent of jobs lost from the prior high, peaking in August 2007 at 213,300 jobs. As the credit crunch unfolded, securities employment declined at a rapid pace, mirroring the decline; by the end of March 2009, securities employment declined 11.6 percent from that August 2007 cyclical high. Although the overall New York State unemployment rate was unchanged in March 2009 from the prior month at 7.8 percent, it is projected to increase to 8.1 percent in 2010 due to further weakening of the economy and exposure to the banking and manufacturing sector. 3 3 New York State Senate Finance Committee, Economic and Revenue Forecast SFY , February 23, 2009, p

5 Source: BLS (Year-end data) After decades of decline, New York State s share of the national securities industry s workforce trended slightly upwards in 2001, peaking in 2007 before beginning to decline at the start of the current recession. The latest available BLS figures show that in March 2009, New York State accounted for 23.2 percent of national securities industry jobs, down from 23.8 percent recorded at 2008 year-end. New York City Employment According to BLS data, New York City s securities industry employment decreased by 1.8 percent in March from February s level. The securities industry s headcount in New York City was 169,200 at end-march, a decline of 3,100 jobs compared to the prior month s level. For the first quarter, the New York City securities industry shed 4,100 jobs, or 2.4 percent. From the monthly peak of 191,800 in August 2007 to end-march 2009, New York City has lost 22,600 (11.8 percent) of securities industry jobs. In the prior economic downturn, employment peaked with 200,300 jobs in December 2000 and declined to 159,000 jobs in April 2003, a loss of 41,300 jobs or 20.6 percent As of March 2009, New York City accounts for only 20.8 percent of US securities employment, only 0.1 percent higher than the record low of 20.7 percent reached in

6 Source: BLS Source: BLS (Year-end data) Paul Rainy Research Analyst 5

7 SECURITIES INDUSTRY EMPLOYMENT December 2000 March 2009 Source: BLS 6

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9 SIFMA RESEARCH DEPARTMENT Kyle Brandon Managing Director, Research Research Charles Bartlett: Paul Rainy: Sharon Sung: Surveys Bernard Reichert: Nancy Cosentino: The Securities Industry and Financial Markets Association (SIFMA) prepared this material for informational purposes only. SIFMA obtained this information from multiple sources believed to be reliable as of the date of publication; SIFMA, however, makes no representations as to the accuracy or completeness of such third party information. SIFMA has no obligation to update, modify or amend this information or to otherwise notify a reader thereof in the event that any such information becomes outdated, inaccurate, or incomplete. Prepared by SIFMA Research Department Copyright 2009 Securities Industry and Financial Markets Association

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