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5 Sector ETFs That Show Promise After July Jobs Data

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The U.S. economy added 528,000 jobs in July of 2022, breezing past market forecasts of 250,000 and above an upwardly revised 398,000 in June, pointing to a solid jobs market. In July, the unemployment rate edged down to 3.5%, and the number of unemployed persons edged down to 5.7 million. The July jobs data marks larger than the average monthly gain over the prior four months (+388,000).

Total nonfarm employment has increased by 22.0 million since hitting a trough in April 2020 and has returned to the pre-pandemic level. Private-sector employment is 629,000 higher than in February 2020, although several sectors have yet to recover. On the other hand, government employment is still 597,000 lower than its pre-pandemic level.

Among the unemployed, the number of permanent job losers, at 1.2 million in July, continued to trend down over the month and is 129,000 lower than in February 2020. Below, we have highlighted some of the sectors that will likely see smooth trading in the days ahead in light of the July jobs data.


Last month, leisure and hospitality employment grew by 96,000, thanks mainly to persistent growth in food services and drinking places (+41,000). Employment in leisure and hospitality is still down by 7.8% from February 2020.

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.


Employment in the healthcare industry increased by 70,000 in July. Job gains occurred in ambulatory health care services (+47,000), hospitals (+13,000), and nursing and residential care facilities (+9,000). Employment in health care overall is below its February 2020 level by 78,000 or 0.5%. The Zacks Rank #1 fund Health Care Select Sector SPDR ETF (XLV - Free Report) can be played to tap the momentum.


Employment in transportation and warehousing was decent in July (+21,000). Over the month, job gains continued in air transportation (+7,000) and support activities for transportation (+6,000). SPDR S&P Transportation ETF (XTN - Free Report) has a Zacks Rank #2 with a High risk outlook.


Employment in manufacturing (+30,000) was upbeat in July. Employment in manufacturing decreased by 41,000 from its level in February 2020. Employment in durable goods industries rose by 21,000, with job gains in semiconductors and electronic components (+4,000) and miscellaneous durable goods manufacturing (+4,000). Industrial Select Sector SPDR ETF (XLI - Free Report) has a Zacks Rank #2.


Employment in construction rose by 32,000 in July. Construction employment is 82,000 higher than in February 2020. Invesco Dynamic Building & Construction ETF (PKB - Free Report) can thus be considered for a play.