Bull Bear Report Jan 07 2011

Finance Employment Increased in December after November Drop

By julie steinberg

The financial activities sector saw a gain of 4,000 jobs last month after a loss in November, according to the December Employment Situation Report from the Bureau of Labor Statistics. Finance and insurance gained 600 jobs, though insurance carriers lost 3,700 jobs. Real estate, rental and leasing gained 3,600 jobs.

The financial activities sector spans finance and insurance, commercial banking, security, commodities, insurance, funds and real estate.

The gain was expected, said Nigel Gault, chief U.S. economist with IHS Global Insight. November was an usually weak month for the finance industry, he said, adding he would have been surprised if December had been similar.

Real estate hiring picked up in December, but Gault isn't sure why the number moved that sharply. "It's true there has been some pickup in existing home sales, a gradual pickup after the plunge that followed the end of the home buyer tax credit. That may have had some influence. But there's plenty of month to month volatility."

The trend in insurance is much easier to discern. Insurance is the one sector that's been losing "pretty steadily" for some time now, Gault said. He believes the sector is becoming more efficient and finding itself able to perform with fewer people. The sector has been on a roller coaster, trading month-to-month losses and gains since September for a total of 4,000 jobs lost since that month.

Meanwhile, 4,400 jobs were gained this month in securities and investments, but Gault warned that the area is moving sideways -- no serious gains and no serious losses. Over the last six months, he said, "basically nothing has happened."

The unemployment rate in financial activities hovered at 6.4% in December, down from 7.2% a year earlier and from 6.7% the previous month.

The overall unemployment rate dropped from 9.8% to 9.4%, surprising economists. Gault had expected the rate to drop by a tenth of a percentage point. But observers shouldn't get too excited: the number reflects some jobs being traded and also reflects people leaving the labor force, according to Gault.

"Certainly this big move understates the difficulty in getting the unemployment rate down," Gault said.

Write to Julie Steinberg

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