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Winning ETF Areas Amid Downbeat August Jobs Data

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The U.S. economy added 235,000 jobs in August 2021, the lowest in seven months and well below the forecast of 750,000 as a surge in COVID-19 infections probably kept companies from hiring and workers from actively looking for a job.

The U.S. unemployment rate declined to 5.4% in July 2021, below market expectations of 5.7%. The number of unemployed persons dropped by 782,000 to 8.7 million.

In August, considerable job gains happened in professional and business services, transportation and warehousing, private education, manufacturing, and other services.

August’s job creation — the worst since January 2021 — comes with rising fears about the impact of rising COVID-19 cases which can stall economic recovery. Leisure and hospitality jobs, which were the key drivers of overall gains at 350,000 per month for the past six months, came to a halt in August as the unemployment rate in the industry shot up to 9.1%.

In August, job gains in arts, entertainment, and recreation (+36,000) were more than counterbalanced by a loss in food services and drinking places (-42,000). Employment in leisure and hospitality is down by 10%, since February 2020.

Against this backdrop, below we highlight a few winning ETF areas for the month of August.  

Transportation and Warehousing

Last month, transportation employment grew by 53,000. Employment gains have been led by strong growth in couriers and messengers and in warehousing and storage, which added 20,000 jobs each in August. Air transportation also added jobs (+11,000), while transit and ground passenger transportation – which includes school buses – lost jobs (-8,000).

The data makes iShares U.S. Transportation ETF (IYT - Free Report) a timely investment. The fund has a Zacks Rank #2 with a High risk outlook.


Manufacturing created 37,000 jobs in August, with gains in motor vehicles and parts (+24,000) and fabricated metal products (+7,000). Employment in manufacturing is down by 378,000 from its pre-pandemic level in February 2020. Obviously, such positive data makes us keep a close watch on Industrial Select Sector SPDR ETF (XLI - Free Report) .

Financial Activities

Employment in financial activities rose by 16,000, with most of the gains occurring in real estate (+11,000). Employment in financial activities is down by 29,000 since February 2020. This makes Vanguard Real Estate ETF (VNQ - Free Report) an important bet (read: Time to Tap Cyclical Sector ETFs?).


Mining added 6,000 jobs in August, reflecting an uptick in support activities for mining (+4,000). Employment has risen by 55,000 since the trough in August 2020 but is 96,000 below the peak in January 2019.

SPDR S&P Metals & Mining ETF’s (XME - Free Report) index represents the metals and mining sub-industry portion of the S&P Total Market Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, American Stock Exchange, NASDAQ National Market and the NASDAQ Small Cap exchanges. The Metals & Mining Index is a modified equal-weight index. The expense ratio of the fund is 0.35%.