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Financial sector continues bleeding jobs

Sector records 60,962 job cuts for 2013

New York City

Although layoff announcements fell in December, four of the top five job-cutting industries witnessed significant downsizing last year, with the financial sector leading the way, the latest Challenger, Gray & Christmas report on U.S. layoffs concluded.

The financial sector recorded 60,962 job cuts for 2013, up 49% from 41,008 in 2012.

While the industry was impacted by several factors in 2013, most of them were unrelated to the health of the economic recovery, John Challenger, CEO of Challenger, Gray & Christmas, said.  

"In fact, in the case of the financial sector, the ongoing recovery was, ironically, a contributing factor to increased layoffs, as these institutions shed the thousands of extra workers brought on to handle foreclosures as well as the refinancing of troubled mortgages," Challenger said.  

"As the economy improved, the number of foreclosures and troubled mortgages decline. At the same time, mortgage rates and home prices increased, which lowered demand for mortgage bankers," he added.

As a result of the drastic downsizing in the financial sector, New York-based firms experienced the most job cuts in 2013 with 82,952 layoffs.

The next closest was California with 59,535 cuts, and Illinois-based companies which reported 43,431 job cuts last year.

Overall, the Challenger, Gray & Christmas layoff report noted that job cuts fell to their lowest level for the year in December as U.S.-based employers reported plans to reduce payrolls by 30,623 during the month. The significant drop is 32% lower than November’s total of 45,314.

Posting similar results, jobless claims trended down for the week ended Jan. 4, falling by 15,000 filings to 330,000 reports, the U.S. Department of Labor said.

The four-week moving average also posted some improvement and recorded a drop of 9,750 filings to 349,000 from the previous week’s revised average of 358,750. Although the 4-week average is down, it is still hitting nearly 20,000 higher than the month-ago comparison, analysts with Econoday said.

"Employers seem less and less inclined to make dramatic staffing decisions in the final month of the year. We have had several years, when it was among the largest job-cut months of the year, if not the largest. It could be the spirit of the holiday season that is prompting employers to hold off on announcing layoff plans, but it is more likely to be the result of increased confidence heading into each new year," said John Challenger, CEO of Challenger, Gray & Christmas.

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