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4 Sector ETFs Grab Attention on Solid Job Creation

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The U.S. economy added 1.371 million jobs in August 2020, decreasing from the downwardly revised 1.734 million in the previous month and slightly below market forecasts of 1.4 million. Overall, the unemployment rate was 8.4% in the month of August, down from 10.2% even as employers slowed their hiring.

The change in total nonfarm payroll employment for June was revised down by 10,000, from 4,791,000 to 4,781,000, and the change for July was revised down by 29,000, from 1,763,000 to 1,734,000. With these revisions, employment in June and July combined was 39,000 less than previously reported.

Average hourly earnings for all employees on private nonfarm payrolls rose by 11 cents to $29.47 in August. Average hourly earnings of private-sector production and nonsupervisory employees increased by 18 cents to $24.81, following a decrease of 10 cents in the prior month.

Winning Sector ETFs

Against this backdrop, investors should bet on the sector ETFs that are the largest beneficiaries of the August jobs data. Below we have highlighted some of these that will likely see smooth trading in the days ahead.

Leisure and Hospitality

Employment in leisure and hospitality gained by 174,000. About three-fourths of the jobs gains were occurred in food services and drinking places (+134,000). Despite job gains totaling 3.6 million over the last 4 months, employment in food services and drinking places was down by 2.5 million since February (see all Consumer Discretionary ETFs here).

Invesco Dynamic Leisure And Entertainment ETF (PEJ - Free Report) – The underlying Dynamic Leisure & Entertainment Intellidex Index comprises stocks of U.S. leisure and entertainment companies.


Employment in transportation and warehousing rose by 78,000 in August, with gains in warehousing and storage (+34,000), transit and ground passenger transportation (+11,000), and truck transportation (+10,000). Employment in transportation and warehousing is down by 381,000 since February.

iShares U.S. Home Construction ETF (ITB - Free Report) – The underlying Dow Jones Transportation Average Index measures the performance of companies from the Industrial Transportation, Airline and General Industrial Services industries of the U.S. equity market.

Health Care

Jobs in the health care sector grew by 75,000 in the month, with gains in offices of dentists (+22,000), hospitals (+14,000), offices of physicians (+27,000) and home health care services (+12,000) grabbing the spotlight.

Health Care Select Sector SPDR Fund (XLV - Free Report) – The underlying Health Care Select Sector Index includes companies from the following industries: pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.


In August, retail employment gained by 249,000, with almost half the growth occurring in general merchandise stores (+116,000). Motor vehicle and parts dealers (+22,000), electronics and appliance stores (+21,000), and miscellaneous store retailers (+17,000) also deserve a mention. Employment in retail trade is 655,000 lower than in February.

VanEck Vectors Retail ETF (RTH - Free Report) – The underlying MVIS US Listed Retail 25 Index of the fund tracks the overall performance of companies involved in retail distribution, wholesalers, on-line, direct mail and TV retailers, multi-line retailers, specialty retailers, and food and other staples retailers.

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