Financial Sector Saw Record Job Cuts in 2007

January 3, 2008 No Comments »

According to a report released today by Challenger, Gray & Christmas, the 153,105 job cuts in the financial sector announced last year beat the previous record set in 2001 by a hefty 31 percent and more than tripled the amount at the end of 2006.

In the mortgage sector alone, 86,126 jobs were cut during the year as the mortgage crisis shuttered hundreds of lending operations nationwide.

And despite the record numbers, Challenger expects more layoffs in the struggling financial sector in 2008.

“Job cuts in the financial sector declined in November and December, but major job-cut announcements may be on the horizon for Citigroup and Merrill Lynch,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

Last year, Citigroup announced that it would lay off roughly 17,000 employees and top mortgage lender Countrywide Financial cut at least 12,000 jobs.

“Furthermore, some experts are predicting that the credit crisis resulting from investments in subprime home loans will spread to those who invested in mounting consumer credit card debt,” Challenger added.

Overall, 768,264 jobs were cut in 2007, 8.5 percent less than the cuts announced in 2006 and the lowest since 2000, Challenger reported.

The 44,416 job cuts for the month of December were down by about 39 percent from November and down 18.7 percent from December a year ago.

After the financial services sector, the automotive industry saw the most layoffs in 2007, with 78,880 jobs cut, including 13,000 at Chrysler amid the automaker’s sale to private equity firm Cerberus Capital.

Challenger reported that the weakening dollar has led to high demand for U.S. exports, preventing the housing crisis from leading to widespread job losses in other sectors.

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