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Financials Add Jobs While Banks Continue Cutting

Stocks in this article: BAC

NEW YORK ( TheStreet) -- While banks and insurance carriers saw shrinking employment during June, overall numbers for finance-related employment increased.

According to the U.S. Labor Department's June unemployment report, companies in the "financial activities" category added 5,000 jobs during the month, to 7.7 million, after adding 9,000 jobs the previous month, on a seasonally adjusted basis. The sector added 57,000 full-time positions from June 2011.

On an unadjusted basis, total employment in the financial activities sector grew by 62,000 during June, to 7.8 million, following an increase of 29,000 positions in May. Unadjusted sector employment was up by 60,000 full-time positions from a year earlier.

As the economy continues to move through the later stages of the credit crisis, the largest seasonally adjusted increase within financial activities was among companies providing credit remediation and related services, which added 4,700 positions during June. There were also 3,700 full-time jobs created in the "securities, commodity contracts and investments" category, and while there were 2,600 real estate jobs added, there was a decline of 2,800 positions in the "in rental and leasing services" category.

On a seasonally adjusted basis, commercial banks saw employment rolls shrink by 2,900 during June, following a decline of 1,800 in May, while growing by 1,500 positions year-over-year, to 1.3 million. On an unadjusted basis, commercial bank employment increased by 1,400 positions during June, following a decline of 2,300 in May. Total unadjusted commercial bank payrolls grew by 1,400 positions from a year earlier, to 1.3 million.

Considering the pace of industry consolidation and the efforts of many large banks to trim expenses -- and payrolls -- as they struggle to maintain healthy profits while interest spreads narrow, the commercial bank employment numbers have held up well over the past year.

The Federal Deposit Insurance Corp. reported that the number of banks and savings and loan associations in the U.S. declined to 7,307 as of March 31, from 7,357 the previous quarter and 7,574 a year earlier. The 3.5% year-over-year decline in the number of institutions included 82 bank and thrift failures and 185 institutions disappearing through mergers.

Many of the largest U.S. banks are going through long-term efforts to trim expenses and right-size their staffs, amid the weak environment for investment banking and trading revenue, and the continued narrowing of net interest margins, as short-term rates remain near zero and long-term rates decline.

Bank of America (BAC) is in the midst of a multi-year cost-cutting and efficiency improvement program called "Project New BAC." The company reported having 279,000 full-time equivalent employees as of March 31, declining from 282,000 at the end of 2011 and 288,000 in March 2011.

Insurance carriers saw total payrolls declined by a seasonally adjusted 3,500 positions during June, following an increase of 2,500 the previous month. Total employment by insurance carriers grew by 200 year-over-year to 2.3 million in June, on a seasonally adjusted basis.


-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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