U.S. bank job cuts slow, but bloodshed not over yet

By Chavon Sutton - Analysis

NEW YORK (Reuters) - The brutal pace of job losses on Wall Street may be slowing, but experts remain cautious about whether this means a quick turnaround is on the way.

Finance and real estate jobs fell again in May, but at a much slower pace than in previous months, according to the Bureau of Labor Statistics monthly report released on Friday.

The financial services sector lost 30,000 jobs in May, less than the 50,000 jobs some analysts were expecting would be lost. The number was also much lower than the prior six-month average monthly job loss of 46,000.

Half the jobs lost in May were in credit-related areas, including credit cards and sales financing. Another 10,800 jobs were lost in securities brokerage, followed by 3,500 jobs in insurance.

On a positive note, 600 jobs were gained in the mortgage brokerage and processing sub-sectors, reflecting the recent surge in mortgage refinancings, though that gain may be short-lived if the higher mortgage rates of recent weeks choke off interest in refinancing.

The real estate sector also showed some signs that the worst might be over, losing a net 11,000 jobs in May, compared with 13,000 in April.

News of the slowing trend has been welcomed but is not surprising to economists who have been seeing signs of improvement in key indicators for some time.

In the latest sign of recovery, the U.S. government said on Tuesday it had agreed to allow 10 of the nation's biggest banks to pay back a combined $68 billion of taxpayer money pumped into them last year to combat the financial crisis.

"We think firms have effectively reduced jobs through rapid job cuts over the past several months already," said Michelle Meyer, an economist at Barclays Capital. "Broadly speaking, the pace of job cuts should continue to slow, reaching a bottom some time in the third quarter."

And financial recruiters have also seen some light at the end of the tunnel. "We've already seen selective hiring particularly at boutique investment banking firms," said Skiddy von Stade, chairman of OneWire.com, a finance industry hiring and career management tool.

From Evercore Partners and Greenhill & Co, to Moelis & Co, Nomura Securities, and Perella Weinberg, boutiques have been poaching high profile names from larger banks, including Bank of America, JP Morgan Chase, and Morgan Stanley, for months.

Still, further job cuts loom, but it is unclear where these cuts stand because some banks are being less than forthcoming about numbers.

For example, Bank of America announced in December that it was slashing as many as 35,000 positions by 2011, but a spokesman declined to provide any updated figures when asked on Tuesday about how many of those staff have already gone.

Citigroup has cut 63,000 jobs since the end of 2007, including 13,000 by March 31, but a spokesman declined to comment further on what has happened since.

Some economists are not overly optimistic about hiring on Wall Street until the economy and lending picks up again.