Is Financial Employment in the U.S. Finally Set to Make a Big Comeback?

On the first Friday of every month, the U.S. Bureau of Labor Statistics (BLS) gives us their take of employment growth overall and by broad industrial groups.  Friday’s top line growth figure came in at +126K in net new jobs for the month of March.

Although the top line figure is the most influential on market performance, the industry details provide an interesting insight into where jobs are showing up and how quickly the economy is recovering in various sectors.

A Month over Month Look at Employment Growth by Industry

First, here is where U.S. jobs have come from through the first three months of 2015. Interestingly, the largest job growth area is still Education & Health, up 137K.

The other members of the top five growing industries (by broad classification) include Trade, Transportation, and Utilities (128K), Leisure and Hospitality (107K), Professional and Business Services (102K), and Retail Trade (94K).

In the middle of the pack is Finance, up 34K through the first three months of 2015.

Employment Growth in 2015 by Sector

On a Percentage Growth Basis

The absolute growth figures can sometimes be misleading because of the sizes of the various industries.  Here’s a look at year-to-date (YTD) percentage growth difference. When viewing the growth numbers from this perspective, some shifting occurs.

On top is Construction, up 1.10%.  The remaining members of the top five include Leisure & Hospitality (up 0.72%), Education & Health Services (up 0.63%), Retail Trade (up 0.60%), and Natural Resources (up 0.56%).

Down towards the bottom of the list is Finance, up 0.42%.

Percentage Employment Growth in 2015 by Sector

A Broader Perspective: Industry Job Growth Since the Recession

The fact that Finance is currently an average to slightly below average industry begs the question – when will Finance see its employment boom? The following is a broader view, looking at where job growth has come from since the onset and recovery from the 2008 global recession.

The graph is labeled by business cycle peak year, with each colored line being the the year in which a peak occured. The horizontal axis is the number of months into the recovery. The vertical axis is the percentage change in employment (cumulative) since January 2008. As shown, the Finance industry is still 2% below where it was in January 2008, which is lower than what many other industries have experienced.

What does this suggest?

This suggests at least two things. First, Finance has little downside in terms of employment growth. Second, a boom is likely still on the horizon for the Finance industry.  (When the boom will materialize is still up for debate, but one thing is more certain, a boom will eventually materialize).

Financial Employment from Peak

Conclusion

Overall, employment in the financial industry appears poised for strong growth after a few years of sub-par job creation. If the early indications of 2015 are indicative of the remainder of the year, investment banking and the other big sectors of the financial industry could be headed for a banner year.

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