U.S. Economy Added Jobs While Most of Financial Sector Continued to Cut, Insurance Firms Being One Exception
U.S. unemployment figures are improving, but so far, financial firms are failing to participate in the rally.
The 7,611 job cuts in the financial sector mark the largest one-month total since September 2011, when 31,167 job cuts were announced (most of which came from a single announcement by Bank of America), outplacement firm Challenger, Gray & Christmas reported this week.
Banks, brokerages and other financial services companies announced plans to shed 7,611 jobs in January, Challenger, Gray said, although one financial sector—insurance—announced plans last month to hire an additional 1,186 employees, second only to the automotive industry’s 3,675 planned hires announced last month.
During all of 2011, the finance sector announced 63,624 cuts, up 165 percent from 2010. The January number, meanwhile, was up slightly from the 7,433 jobs finance firms shed in December of last year.
The rest of the economy is faring better: Figures from the Labor Department showed that employers in the U.S. added 243,000 jobs in January. As well as being the highest in nine months, the gain was around 100,000 more than analysts had anticipated.
The advance also contributed to a fifth straight fall in the U.S. unemployment rate. At 8.3 percent, it's the lowest in three years. This is despite the fact that, historically, January is the heaviest job-cut month, according to Challenger, Gray’s press statement.
"In terms of the broader outlook, one report does not make a trend but there is little doubt that U.S. economic data continues to surprise on the upside," said Dan Greenhaus, chief global strategist at BTIG.
Retailers and financial firms remain troubled, however. Retailers lead a surge in job cuts last month, with 12,426 job cuts for the sector. The retail total is the largest retailers have experienced since January 2010 when 16,737 were eliminated. The latest cuts are related to restructurings, store closings and other cost-cutting measures, says Challenger, Gray.
Interestingly enough, for the second consecutive month, the government sector saw relatively few job cuts, with these employers announcing just 3,021 layoffs in January, says the new report,
“The two low job-cut months is undoubtedly a welcome trend in a sector that averaged 15,255 job cuts per month in 2011 and announced a total of 325,319 job cut in the 24-month period ending in December,” says Challenger, Gray.