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4 Sector ETFs to Sizzle on Solid February Jobs Data

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The U.S. economy added 379,000 jobs in February 2021, after an upwardly revised 166,000 rise in January and beating market expectations of a rise of 182,000 thanks to easing business restrictions amid reopening of economies, falling coronavirus infection rates, vaccine distribution from multiple makers and hopes of hefty fiscal stimulus under the Biden administration.

The U.S. unemployment rate declined to 6.2% in February 2021, the lowest rate since April's record high of 14.8% and below market expectations of 6.3%. Still, the jobless rate remained well above the pre-pandemic levels. Employment in was off by 9.5 millionfrom February 2020, indicating that labor has yet to go a long way to return to the pre-pandemic level.

The number of unemployed people declined by 158 thousand to 9.97 million, sliding below the 10 million mark for the first time since March 2020. Investors may want to bet on ETFs that are the largest beneficiaries of job gains. Below, we have highlighted some of these that will likely see smooth trading in the days ahead.

Leisure

Last month, leisure and hospitality employment grew by 355,000, thanks mainly to the increasing reopening of the economy. Gains mainly occurred food services and drinking places (+286,000). Job gains also happened in accommodation (+36,000) and in amusements, gambling, and recreation (+33,000). Employment in leisure and hospitality is still down by 3.5 million, or 20.4% year over year.

The data makes Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report) a timely investment. The fund has a Zacks Rank #3 (Hold) with a Medium risk outlook (read: Top ETF Stories of February Worth Watching in March).

Health Care

Health care added 46,000 jobs in the month. The February job gains mainly occurred in ambulatory health care services (+29,000). Health care employment is still lower by 909,000 than in February 2020.

The fund iShares U.S. Healthcare Providers ETF (IHF - Free Report) should thus benefit. The index of the fund looks to track stocks of health maintenance organizations, hospitals, clinics, dentists, opticians, nursing homes, etc. The fund has a Zacks Rank #3 (read: Healthcare ETFs in Focus on UnitedHealth's Solid Q4 Earnings).

Retail

Last month, retail employment grew by 41,000, thanks mainly to a gain of 14,000 in general merchandise stores. Gains occurred in general merchandise stores (+14,000), health and personal care stores (+12,000), and food and beverage stores (+10,000).

Following sharp job losses in March and April of 2020 (down 2.4 million jobs over the two months combined), retail trade managed to add 2.0 million jobs from May through February. Employment in retail trade was still down by 411,000 in February (read: Sector ETFs to Benefit/Lose as Oil May Hit $70 Soon).

The data makes SPDR S&P Retail ETF (XRT - Free Report) a timely investment. The fund has a Zacks Rank #2 with a Medium risk outlook.

Manufacturing

About 21,000 jobs were created in the sector in the month. Gains were palpable in transportation equipment (+10,000). Obviously, such positive data makes us keep a close watch on Industrial Select Sector SPDR ETF (XLI - Free Report) .

The underlying Industrial Select Sector Index includes companies from the following industries: industrial conglomerates; aerospace & defense; machinery; air freight & logistics; road & rail; commercial services & supplies; electrical equipment; construction & engineering; building products; airlines; and trading companies & distributors. The fund has a Zacks ETF Rank #1.

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