While today's release of the Bureau of Labor Statistics' Employment Situation Report for October showed that things are on the up-and-up in several sectors, the news may not be so bright for financial services.
Unemployment in financial activities increased in October, rising to 6.7% from 6.3% in September. This was anticipated, says Alan Kramer of Kramer Executive Resources, a New York-based executive recruiting firm.
"When you look at all of the components -- the fear of interest rates going up, controls that new laws have on banks and the marketplace, and the fact that banks may not be able to be in the same businesses any longer, we're going to see an effect on employment," Kramer said. "In the last year and a half, numbers have shown a large increase in unemployment in this area. People are still reticent to spend money on long term employee commitments."
Payrolls in finance and insurance increased by 2,600, countered by a decrease of 3,100 in real estate, rental, and leasing. While the financial activities sector overall saw a small, 1,000-payroll loss between September and October, an increase in the sector-specific unemployment rate may leave many wondering when the industry will see a turnaround.
Important to note, however, is that the sector's unemployment has decreased since this time last year, when it averaged at 7%, signaling that progress has been achieved in the industry since 2009.
Kramer advises that significant progress may not be seen for another year, due to a combination of factors. "This is not a black and white issue, because we're dealing with so many elements affecting marketplace. It's not just a one month issue." Citing the mountain of foreclosure problems, and a shift in the U.S. labor market away from manufacturing, Kramer believes the financial services sector holds a lot of weight on its shoulders as the U.S. inches toward a nationwide recovery.
After considerable losses in September, total nonfarm payroll employment in the U.S. increased by 151,000 in October, coupled with 159,000 additional private-sector payroll employees last month. These gains were a pleasant surprise for economists that predicted gains of 60,000 nonfarm payrolls overall, particularly after ADP's report of modest gains in private-sector employment this week, adding 43,000 private-sector jobs since September.
Overall unemployment stood its ground at 9.6% in October -- a figure that, the BLS notes, has been essentially unchanged since May. This result was as expected by economists. Anticipated gains were achieved within mining and healthcare, while manufacturing, construction, and government employment saw little change.
Write to Kelly Eggers