Layoffs in the financial services industry increased last month as the sector struggled with global markets and new regulations.
According to the monthly planned layoffs report from Chicago-based outplacement firm Challenger, Gray & Christmas, layoffs at banks, brokerages and other financial institutions more than doubled in May, rising to 4,424 from 1,768 cuts in April. So far this year, the industry has announced 17,284 layoffs, behind only firms in the computer and transportation sectors.
Across all industries, employers cut a total of 245,540 jobs since the beginning of 2012, up 20% from January through May of 2011. Layoffs last month and this year have been primarily due to restructuring, closing and cost-cutting initiatives.
While total planned layoffs are up over last year, they are down significantly from 2009 during the depth of the financial and economic crisis. In the first five months of 2009, employers announced 822,282 job cuts, 70% higher than during the same period this year.
In the financial sector, firms announced plans to hire 212 workers last month, totaling 6,151 hiring announcements in the industry thus far this year.
"The banking sector continues to face significant obstacles and difficulties with the crisis in Europe and the risk it poses to U.S. financial institutions," said John Challenger, chief executive of the outplacement firm. "That's not going away."
He attributed some of the cuts to the increased regulation over how banks bring in funds. "Credit cards particularly are causing some layoffs," he said, "as banks lose the extra fees they used to get under the new legislation." Of the layoffs that occurred in finance, 40 were from the Capital One Financial Corp. credit card business. The financial services company announced a total of 1,049 layoffs last month.
Other firms like Bank of America, which is undergoing a companywide restructuring process that involves significant job cuts, and HSBC, which announced its plan to cut 30,000 of its employees in August of last year, continue to trim their ranks.
While it hasn't yet resulted in layoffs, Challenger said the $2 billion trading loss at J.P. Morgan last month suggests that the industry as a whole still has a tough road ahead.
"It continues to be challenging for banks," he said. "Banks continue to go through consolidation." This month's numbers show "a risk for the entire economy, including the financial sector."
Across all industries, layoffs rose by 53% last month, the report said, hitting an eight-month high of 61,887 cuts and a 67% increase over May of 2011. Many of the month's losses were in the computer industry; driven more specifically, the report noted, by the 27,000 layoffs announced at Hewlett-Packard.
"We haven't seen many mega layoffs in the past couple of years," he said, but H-P's announcement, paired with a potential layoff looming at Hostess Brands, "is usually a sign that the economy is wavering."
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