j u l y 2 2, 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 j u l y 2 2, Securities Industry Employment Update By: Paul Rainy Volume IV No. 7 New York n Washington n London n Hong Kong

2 SIFMA RESEARCH DEPARTMENT Kyle Brandon Managing Director, Research Research Charles Bartlett: Paul Rainy: Sharon Sung: Surveys Bernard Reichert: Nancy Cosentino: Prepared by SIFMA Research Department Copyright 2009 Securities Industry and Financial Markets Association

3 SECURITIES INDUSTRY EMPLOYMENT UPDATE Summary The U.S. Department of Labor s Bureau of Labor Statistics (BLS) estimated national securities industry employment decreased by 0.1 percent in June and 2.3 percent in the second quarter as a whole. 1 Securities industry employment in New York State decreased in June by 0.8 percent or 1,400 jobs, while New York City securities employment increased by 0.2 percent or 300 jobs. For the second quarter, both New York State and New York City securities employment decreased by 1.5 percent, 2,900 and 2,500 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 9.3 percent, or 81,200 jobs, to 788,400 by the end of the second quarter of In June 2009, the U.S. securities industry headcount decreased by 500 jobs, or 0.1 percent, from the previous month. The U.S. economy remained weak in the second quarter of 2009, shedding 1.3 million jobs for a total of approximately 6.5 million jobs lost since the recession began in December With a few exceptions, such as in healthcare, most sectors experienced job losses. Consumer and business spending remained weak and the national unemployment rate reached a 26-year high of 9.5 percent in June. Employment in the securities industry, 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, in the Americas the banking/brokerage industry lost 1,050 jobs in the second quarter for a total of 157,580 jobs lost since December Despite current economic woes, several economic indicators point to signs of improvement leading most economists to predict that the U.S. economy will begin to recover later in Sales of new and existing homes increased in May 2009 over the previous month, with buyers taking advantage of low mortgage rates, higher levels of affordability, and homebuyer tax credits. Current homeowners continued 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. On July 20, the Conference Board s index of leading economic indicators showed improvement in seven out of the ten indicators used to project economic activity in the next three to six months. This is the third straight month that the index increased, which suggests that a recovery is around the corner. 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. 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, June 23, 2009, ( SIFMA Research Reports, Vol. IV, No. 7 (July 22, 2009) 1

4 Source: Bureau of Labor Statistics (BLS), U.S. Department of Labor Source: BLS (Year-end data) 2 SIFMA Research Reports, Vol. IV, No. 7 (July 22, 2009)

5 New York State Employment BLS estimated that securities industry headcount in New York State decreased by 0.8 percent, or 1,400 jobs in June, to 184,900 from May s level of 186,300. For the second quarter as a whole, New York State securities industry employment decreased by 2,900 jobs, or 1.5 percent. Source: BLS The 28-month job recession that followed the 2000 peak of 216,700 jobs 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 shortly after, securities employment declined at a rapid pace, mirroring the decline; by the end of June 2009, securities employment declined 13.3 percent from that August 2007 cyclical high. The overall New York State unemployment rate increased to 8.7 percent in June, up from 8.2 percent in May and is the highest since October SIFMA Research Reports, Vol. IV, No. 7 (July 22, 2009) 3

6 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 June 2009, New York State accounted for 23.5 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 was 164,500 at end- June, an increase of 0.2 percent, or 300 jobs, from May s level. For the second quarter as a whole, the New York City securities industry shed 2,500 jobs, or 1.5 percent. From the monthly peak of 191,800 in August 2007 to end-june 2009, New York City has lost 27,300 (14.2 percent) 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 June 2009, New York City accounted for 20.9 percent of U.S. securities employment, only 0.2 percentage points higher than the record low of 20.7 percent reached in SIFMA Research Reports, Vol. IV, No. 7 (July 22, 2009)

7 Source: BLS Source: BLS (Year-end data) Paul Rainy Research Analyst David Beard Intern SIFMA Research Reports, Vol. IV, No. 7 (July 22, 2009) 5

8 SECURITIES INDUSTRY EMPLOYMENT March 2001 June 2009 Source: BLS 6 SIFMA Research Reports, Vol. IV, No. 7 (July 22, 2009)

9 SIFMA Research Reports, Vol. IV, No. 7 (July 22, 2009) 7

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