Jobs Crunch Seen at Finance Firms
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Two days before the Labor Department is scheduled to release its jobs report, an important indicator of economic health, there are already signs that the crisis in the subprime mortgage industry is resulting in heavy job losses in the financial sector.
Nearly 72,000 jobs were cut nationwide last month, with one in three resulting directly from the housing slump, as mortgage lenders, construction companies, and real estate firms cut jobs to deal with the liquidity crisis, according to the monthly report released this morning by Challenger, Gray & Christmas, Inc., an outplacement consultancy that tracks job cuts.
Financial firms, the backbone of New York’s economy, have been hit the hardest. America’s financial industry has announced nearly 130,000 job cuts so far this year, with 69,664, or 54%, coming from mortgage and subprime lending institutions.
Despite these job losses, September was not as bad as some had anticipated. Job cuts were 9.7% lower than the six-month high of 79,459 in August, and 28.5% lower than last September, when employers announced 100,315 job losses — one of only two times last year that monthly job cuts exceeded 100,000.
“Even if the worst of the crisis is over, as some are saying, we could continue to see heavy job cuts in the financial sector through the end of the year,” the firm’s chief executive, John Challenger, said in a statement. “We are seeing housing-related job cuts spread to other industries such as insurance, consumer product companies, and retailers.”
Yesterday, Morgan Stanley, the New York-based financial bank, said it was cutting 600 jobs related to its mortgage business. The cuts will not affect New York City, people familiar with the matter said.
Mr. Challenger added the housing-related job cuts are starting to spread to other industries such as insurance, consumer product companies, and retailers.
In September, one of the largest providers of home title insurance cut nearly 2,000 jobs due to the housing slump. Over 2,000 job cuts attributed to the housing slump have been announced so far this year by consumer product firms, retailers, and industrial goods manufacturers.