A Look at Private Equity Employment Compared to Other Financial Sectors

Every financial professional is aware of a chart like the following.  The following figure shows the month-over-month growth in employment in the U.S.

Recently, job growth is the U.S. has been strong, with most of the recent months above 200K. The strength in the overall American labor market poses the question – how does private equity look in comparison?

Here’s a look.

Looking at Private Equity Employment Growth vs the U.S.

Here’s a look at year-over-year growth in private equity employment compared to employment growth in the U.S. Overall, it’s been an awesome private equity recovery and expansion.

Employment in the private equity industry is growing at about 7.2% year-over-year, much higher than the 2.2% the U.S. is experiencing economy wide. The boom years are here for private equity.

What’s even more interesting is the strength the industry has experienced since 2013. The oil boom may be gone, but not the private deal making industry.

Private Equity from an Historical Perspective

How does the strength in the private equity industry compare to prior growth periods? Here’s a look.

Overall, although the current 7% growth rate is strong enough to place 2015 in the upper quartile, the 1990s were even stronger. At the high-point, employment in the private equity industry peaked at 11% in March 1994. Other peaks include 1998 and 2000, both peaking at 10%.

So, although growth is strong, the private equity industry still has room to grow.

Looking at Private Equity Compared to Other Financial Sectors

How does the 7% growth rate in the private equity industry compare? Here’s a look at growth in the private equity industry compared to the hedge fund and investment banking sectors. As you can see, clearly private equity is the king.

In second behind private equity’s lead is employment in the hedge fund sector, up 5.2% year-over-year. In third is the beleaguered investment banking sector, with growth barely above the previous year at 0.2%.

Conclusion

Overall, employment growth in the U.S. is strong and private equity is among the leaders in employment growth. Through the first half of 2015, private equity employment is growing at 7.2% year-over-year. The 7.2% is well ahead of the hedge fund employment (5.2%), investment banking (0.2%), and employment growth economy-wide (2.2%).

In comparing the healthy 7.2% growth rate to prior booms in the industry, current conditions still leave room for acceleration. In 1994, employment in the industry peaked at 11%, while in 1998 and 2000, employment in the industry peaked at 10%.

It’s a good time to be employed – or looking for employment – in the private equity industry.