On Friday, the U.S. Bureau of Labor Statistics (BLS) shocked the world when it reported that the American economy created 2.5 million jobs in May. Economists had expected the BLS to report job losses of 8 million or more.
The surprising jobs report had market observers wondering if the economy really can jump back to where it was in February by sometime in 2021. Most of the evidence suggests that the effects of the shutdown may be short-lived.
Whether the recovery is a V-shape or a “rocket ship”, professionals working in the financial industry may wonder where the finance industry fits into all this. Based upon what has been reported to date, the picture is incredibly bright.
The Overall Jobs Picture
Before looking at an industry breakdown of the jobs picture, the following graphic looks at the overall jobs picture.
After the longest expansion on record, in March 2020 the expansion came to an abrupt halt. In March, the American economy lost 1.4 million jobs. That was followed by the worst-ever month for job losses – 20.7 million.
The 2.5 million bounce back in May still leaves more than two decades of job growth to make up. So far, though, the picture appears reasonably bright.
An Industry Breakdown of the Jobs Picture
This background leaves open the question of what the future holds for the financial industry. The following graphic shows the growth in jobs by industry for the first five months of 2020.
Anything stand out? Interestingly, of the broad sectors on which the BLS reports, the Financial Activities sector has held up the best of all the employment sectors. Through May 2020, employment in the sector is down only 2.5% since the start of 2020.
This performance far outpaces other sectors of the economy. The worst of the sectors, Leisure and Hospitality, is down 41.5% while Retail Trade is down 12.8%.
Given that employment in the financial sector has outperformed other sectors, does that mean that the pending “rocket ship” recovery will best the other sectors?
The answer is probably not, but it would not be surprising to see the Financial Activities sector to post the strongest job growth of all sectors when the 2020 year comes to an end. With the greatest expansion on tap, there will be greater demand for early-stage, venture capital, private equity, and other traditional sources of financing to get the economy going again.
Summing Up
Overall, although the global economy still has a massive hole to climb out of, so far, the recovery looks strong. In regard to the financial industry, the picture looks even brighter than the other industries beginning the long slog of recovery.
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