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5 Sector ETFs to Benefit Despite Downbeat September Jobs Data

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The U.S. economy added 194,000 jobs in September 2021, the lowest so far this year and well below forecasts of 500,000. Nonfarm employment has increased by 17.4 million since a recent trough in April 2020 but is down by 5.0 million, or 3.3%, from its pre-pandemic level in February 2020.

“Recent employment changes are challenging to interpret, as pandemic-related staffing fluctuations in public and private education have distorted the normal seasonal hiring and layoff patterns,” the Bureau of Labor Statistics said in the release, as quoted on tradingeconomics.

While the unemployment rate dropped more than expected to 4.8%, the labor force participation rate also declined to 61.6% from 61.7% in August. The average hourly earnings also grew faster to reach a 4.6% year-over-year rate, or the fastest since February.

Below we have highlighted some of these that will likely see smooth trading in the days ahead.

ETFs in Focus

Leisure and Hospitality

In September, notable job gains (+74000) occurred in leisure and hospitality. Employment in food services and drinking places changed little for the second successive month compared with an average monthly gain of 197,000 from January through July. Employment in leisure and hospitality is down by 9.4% since February 2020. The data makes Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report) a timely investment.

Retail Trade

Last month, retail employment grew by 56,000. Employment gains were palpable in clothing and clothing accessories stores (+27,000), general merchandise stores (+16,000), and building material and garden supply stores (+16,000). These gains were partially offset by a loss in food and beverage stores (-12,000). Retail trade employment is 202,000 lower than its level in February 2020. The data makes SPDR S&P Retail ETF (XRT - Free Report) a timely investment.

Transportation and Warehousing

Employment in transportation and warehousing rose by 47,000 in September, in line with gains in the previous two months. In September, job gains continued in warehousing and storage (+16,000), couriers and messengers (+13,000), and air transportation (+10,000). Employment in transportation and warehousing is 72,000 above its pre-pandemic level in February 2020.

Generally, transportation companies are busier when economic activity picks up, leading to strong demand for movement of goods across many economic sectors. iShares Transportation Average ETF (IYT - Free Report) and SPDR Transportation ETF (XTN - Free Report) are two ETFs to cash in on this boom.

Information Technology

Employment in the information industry increased by 32,000 in September. Job additions in motion picture and sound recording industries (+14,000); in publishing industries, except Internet (+11,000); and in data processing, hosting, and related services (+6,000) were noticed. Employment in information is still down by 108,000 since February 2020. John Hancock Multifactor Media & Communications ETF can be played to tap the momentum.


About 26,000 jobs were created in the sector in the month. Gains were palpable in fabricated metal products (+8,000), machinery (+6,000), and printing and related support activities (+4,000). Obviously, such positive data makes us keep a close watch on Industrial Select Sector SPDR ETF (XLI - Free Report) .

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