Financial institutions, facing problems including impending federal rules, have been hiring fewer people than they did during the first three quarters of 2011, outplacement firm Challenger, Gray and Christmas reports.
During the first three months of this year, financial firms announced plans to hire or that they had hired a total of 1,550 people, versus the 1,640 they said they would hire during the first quarter of 2011, says the latest data.
And while planned job cuts across all businesses nationwide declined last month to the lowest levels in over a year, financial services companies announced plans to cut 3,228 jobs in March, up from only 253 jobs in February, says Challenger, Gray.
This year to date through March 31st, financial services firms have announced many more layoffs as well: a total of 11,092, up from 7,207 during the first three months of 2011.
The obvious question is why?
“I think the financial services sector is under continuing consolidation pressure,” said John A. Challenger, chief executive officer of Challenger, Gray and Christmas.
“Many banks are [still] in precarious shape,” he said. Moreover, “I think regulation is a big issue out there,” Challenger said, noting that many financial institutions “are looking at Dodd Frank and are not sure how it’s all going to shake out.”
For that reason, says Challenger, financial organizations are being cautious, thinking that new regulations may reduce their earnings and profitability and might require reduced headcounts.
The top three job-cutting reasons across all businesses last month were closings, restructuring and cost-cuts.
Businesses planning the largest numbers of hires were computer and health care/health products.
Year-to-date through March 31st, consumer products was the leading job-cutting sector, having announced a total of 18,438 layoffs in 2012, including 2,118 in March. That represents a fourfold increase from 2011, when these firms announced just 4,571 job cuts through the first three months.
The second-ranked transportation sector has seen an equally large jump in job cuts. Through March, these employers have announced 17,051 cuts, up 569 percent from the 2,547 job cuts announced by this point a year ago.
These two businesses are key indicators of the economy’s health, so they will be closely monitored in the coming months for more signs of distress, Challenger, Gray reports.
Notably absent from the list of top job cutters is the government sector, which has seen just 5,750 job cuts this year. That is down 86 percent from a 2011 first-quarter total of 41,929.