Our Take: See Any Green Shoots?
On the streets of New York, spring is in the air (finally!). What about the financial job market?
Comments by a Moody's economist last week raised hope that finance sector employment may be "nearing a bottom." Separately, Federal Reserve Chairman Ben Bernanke has embarked on his own campaign to talk up the economy. On Tuesday he said in a speech, "We have seen tentative signs that the sharp decline in economic activity may be slowing," and went on to cite "progress" in stabilizing the financial system and credit markets. A month earlier, Bernanke said in a 60 Minutes interview that he saw "green shoots" in some financial markets.
I have no crystal ball on the markets or the economy. And I'll leave it to others to interpret the signals now emanating from financial institutions' first-quarter results.
Signals From the Trenches Are Mixed
What I do have is an ear to the ground. The signals I'm picking up from the trenches this month are mixed, at best.
One portfolio manager laid off last November just started in a senior role at a three-year old alternative investments firm. He'll emphasize "real asset" investments and so-called TALF funds that will buy asset-backed securities through the Fed's new Term Asset-Backed Securities Loan Facility.
Another contact, a Chicago-based consultant, sees opportunities there for CFA charter holders with top-notch written communication skills.
Now for the bad news.
A contact at an information vendor that's performed strongly throughout the downturn reports her employer has a "hard" hiring freeze in place. Even replacement hiring is verboten. When her team lost two junior members, she lobbied hard to replace them but in the end wasn't permitted to override the freeze.
A contact at a broker-dealer that publicly trumpets, "We're hiring!", also had to beg for permission to replace departing staffers. (His request ultimately was approved.)
A Straw in the Wind
What about job-seekers? A contact in transition since mid-2008 e-mailed this month that he's leaving New York "to live with some family in the mountains." He has a background in equity research and hedge funds and holds a CFA charter. Although an event from his personal life was partly to blame, a dismal view of today's job market also clearly influenced his decision to relocate. "I'm going to still be applying for jobs and doing interviews when I need to but I honestly don't anticipate conditions in our job market improving until well into next year," he wrote. "Thus, I'm going to live rent-free and cheaply for a while."
This person networks incessantly, scours job postings, and doesn't shy from cold-calling people who might be of help. Still, it's been months since he's had an interview.
A New York headhunter cites demand for wealth managers and distressed-asset managers. Boutique firms are hiring investment bankers while bulge-brackets are not, he adds. Because all these trends have been widely reported since mid-2008, his response augurs a dearth of "green shoots" - it suggests new areas of opportunity are not visible.
Financial Job Destruction Intensified Last Quarter
That's our view from the trenches in April. To place things in perspective, Labor Department data show the securities industry's nationwide headcount shrank by 27,500 jobs, or 3.3 percent, in the first quarter. Although job losses among securities and investment firms are hardly surprising, we note that the industry's pace of job destruction picked up during the first quarter - to a worse extent than either the broad financial sector or the U.S. economy as a whole. (Total U.S. nonfarm payrolls declined 1.5 percent on a seasonally adjusted basis through March. Payrolls among "all financial activities" - which includes retail banking and credit cards, insurance and real estate along with trading and investment-related activities - shrank 1.8 percent.)
Since nationwide employment in "securities, commodity contracts, and other financial investments and related activities" peaked in April 2008, it shows a cumulative net decline of 55,100 jobs, or 6.4 percent, from the peak. During the previous down cycle from 2001-2003, the peak-to-trough decline was 92,400 jobs or 11.0 percent.
Within New York City, the main U.S. center for investment banking and related functions, the industry's headcount dropped by 20,800, or 10.9 percent, from its August 2007 peak through February 2009. (Local employment numbers are not seasonally adjusted and are released weeks after the nationwide figures.) In the downturn at the start of this decade, the city lost 41,300 securities jobs or 20.6 percent of the preceding peak employment.