NEW YORK ( TheStreet) -- The September jobs report came in better than expected, but more pain may be in store for finance professionals. The financial sector, which spans a wide range of activities including commercial banking, broking, insurance and real estate leasing, shed 8,000 jobs in September, after adding 5,000 jobs in the previous month, according to the latest data from the Bureau of Labor Statistics. The securities, commodity contracts and investments segment showed the most job losses at 3,400, a breakdown of the data shows. Investment banks such as Goldman Sachs ( GS) and Morgan Stanley are
cutting jobs as they battle a brutal operating environment. The macro economic uncertainty in Europe and the U.S. has affected nearly every line of their business. Commercial banks laid-off 1,800 employees. The insurance sector shed 2,800 workers. >>13 Banks Slashing Jobs The layoffs in September are not substantial in absolute terms and do not really come as a surprise. Banks have not exactly been net job creators in this anemic recovery. The largest banks including Bank of America ( BAC) and Citigroup ( C) have been shedding assets and shrinking their balance sheet as they strive to meet tighter regulatory standards. In recent months, banks have once again begun shedding jobs as the revenue outlook remains bleak. According to Challenger Gray and Christmas, the financial sector has announced 54,013 planned layoffs between January 1 and end of September. A significant amount of those cuts have come from Bank of America, which said it would shed as many as 30,000 jobs as part of a multi-billion dollar cost reduction plan. But analysts expect banks, particularly those with capital markets operations, to announce more job cuts in the months ahead, as the weakness in the investment climate persists. According to Rochdale Securities analyst Dick Bove, brokerage executives are beginning to see the changes in the operating environment as "secular" and not merely cyclical because of a change in global fund flows, recurrent financial crises and financial regulation. That might force investment banks, where labor is the biggest cost driver, to get more aggressive in their downsizing efforts.
"The only action that they can take to deal with the expected environment is to cut costs. In a business where people are the only revenue generating assets, the solution will be to push compensation costs much lower. Translated this will mean lower bonuses and fewer jobs." --Written by Shanthi Bharatwaj in New York >To contact the writer of this article, click here: Shanthi Bharatwaj.
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