Bull Bear Report Feb 04 2011

Finance Employment Decreased in January after December Gain

By julie steinberg

The financial activities sector saw a loss of 10,000 jobs last month after a gain in December, according to the January Employment Situation Report from the Bureau of Labor Statistics. Finance and insurance lost 1,400 jobs, but the real loser was real estate, rental and leasing, which saw 8,500 jobs evaporate.

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

Nigel Gault, chief U.S. economist with IHS Global Insight, had expected a small increase in financial activities, but wasn't too concerned with the drop.

"It hardly moved," he said.

The decrease in real estate, rental and leasing was more puzzling.

"I suppose it's probable that if the bad weather severely disrupted activity, that could have been responsible. Real estate was up the previous month [ed. note by 3,600 jobs] so it's unclear why that occurred."

Stuart Hoffman, chief economist for PNC Financial, said that real estate, rental and leasing tends to hold down financial services. "The banks could be stable but the real estate part makes the category go down a little bit." Hoffman hadn't expected much job growth for the subgroup.

While jobs may have decreased slightly, salaries will be up in 2011, according to Bill Driscoll, district president for New England at Robert Half International, a recruiting and staffing firm. Robert Half predicts salaries in finance and accounting will increase 3% this year.

Securities, commodity contracts and investments gained 2,000 jobs last month, after December's gain of 4,400.

"There's a very gradual upward trend," Gault said. "It's just crawling upwards."

Asset managers are still looking for portfolio managers and workout specialists, according to John Challenger, chief executive of Challenger Gray & Christmas, a Chicago-based outplacement firm.

The unemployment rate in financial activities stood at 7.2%, up from 6.4% in December and up from 6.6% a year earlier.

The overall unemployment rate dropped from 9.4% to 9.0%, surprising economists. Gault had expected a rebound to 9.6%. While 50,000 private sector jobs were created, 600,000 people left the labor force -- people who were discouraged and decided not to look for jobs or young people who decided there just wasn't anything out there.

"It's good news that jobs are being created," Gault said. "But people will subsequently come back into the labor force and we'll have to find them jobs. Employment isn't growing very fast."

One piece of good news for finance pros coming from an unlikely source was the unexpected sharp rise in manufacturing jobs -- up 49,000. Manufacturing additions will have a ripple effect on the rest of the economy, eventually leading to corporate finance opportunities, according to Jodi Chavez, senior vice president for Accounting PRINCIPALS, a division of Adecco, a human resources firm.

Write to Julie Steinberg



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