Back to top

Image: Bigstock

4 Sector ETFs to Play Despite Soft December Jobs Data

Read MoreHide Full Article

The U.S. economy added 199,000 jobs in December 2021, well below market forecasts of 400,000. Non-farm employment has increased by 18.8 million since April 2020 but is still down by 2.3% from its pre-pandemic level in February 2020.

In December, average hourly earnings for all employees on private nonfarm payrolls increased by 19 cents to $31.31. Over the past 12 months, average hourly earnings have increased 4.7%. In December, average hourly earnings of private-sector production and nonsupervisory employees increased by 18 cents to $26.61.

Below, we have highlighted some of the sectors that will likely see smooth trading in the days ahead in light of the December jobs data.

Leisure

Last month, leisure and hospitality employment grew by 53,000, thanks mainly to increased reopening of the economy. Gains mainly occurred in food services and drinking places (43,000). Employment in leisure and hospitality is still down by 7.2% from February 2020. The sector hauled in 2.6 million jobs in 2021.

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 High risk outlook.

Manufacturing

Employment in manufacturing (+26,000) was upbeat in December, primarily in the durable goods industries. Manufacturing employment is down by 219,000 since February 2020. Industrial Select Sector SPDR ETF (XLI - Free Report) has a Zacks Rank #2 (Buy).

Construction

Last month, construction employment grew by 22,000, after monthly gains averaged 38,000 over the prior three months. In December, job gains occurred in nonresidential specialty trade contractors (13,000) and in heavy and civil engineering construction (10,000). Construction employment is 88,000 lower than its level in February 2020. The data makes Invesco Dynamic Building & Construction ETF (PKB - Free Report) a timely investment.

Transportation

Employment in transportation and warehousing was decent in December (+19,000). Employment gains in support activities for transportation (7,000), in air transportation (6,000), and in warehousing and storage (5,000) were noteworthy.

Since February 2020, employment in transportation and warehousing is up by 218,000, reflecting job growth in couriers and messengers (202,000), and in warehousing and storage (181,000). SPDR S&P Transportation ETF (XTN - Free Report) has a Zacks Rank #2 with a High risk outlook.