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ETFs & Stocks Set to Benefit from December Job Data

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The growth in the U.S. labor market cooled down last year from the strongest job growth seen in 2015 since 1999. This is especially true as the economy added a lesser number of 156,000 jobs in December to add up to 2.2 million jobs for all of 2016, representing the smallest gain for any calendar year since 2012. Notably, December marked the 75th straight month of job growth — the highest streak since 1939.

While the unemployment rate ticked up to 4.7% from a nine-year low of 4.6% in November, wages rose 2.9% year over year in December, the strongest increase in more than seven years. For 2016, average hourly earnings rose 2.9% annually. This shows that the labor market is improving enough to reap some benefits for American households and will encourage the Fed to make faster interest rate hikes (read: 5 Top-Ranked Consumer Discretionary ETFs to Buy Now).

Now, with Trump as the elected president, the job market is expected to be the strongest in the coming years given his promise to boost job growth. Notably, Trump will likely bring back manufacturing jobs from other countries and create 25 million jobs over 10 years.

As a result, investors should bet on stocks and 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.

ETFs to Consider

PowerShares DB US Dollar Bullish Fund UUP

An accelerating job market and the resultant improving economy will pull in more capital into the country and lead to appreciation of the U.S. dollar. UUP is the prime beneficiary of the rising dollar as it offers exposure against a basket of six world currencies – euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. This is done by tracking the Deutsche Bank Long US Dollar Index Futures Index Excess Return plus the interest income from the fund’s holdings of the U.S. Treasury securities. In terms of holdings, UUP allocates nearly 57.6% in euro while 25.5% collectively in the Japanese yen and British pound. The fund has so far managed an asset base of $845.8 million while sees an average daily volume of around 1.8 million shares. It charges 80 bps in total fees and expenses. The fund has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook (read: 17 Power-Packed ETFs for 2017).

SPDR S&P Homebuilders ETF XHB

While higher rates might lose appeal for the homebuilding segment, solid labor market fundamentals along with rising wages will continue to fuel growth, creating a buying opportunity in homebuilders and housing-related stocks. The most popular choice in the homebuilding space, XHB, follows the S&P Homebuilders Select Industry Index. In total, the fund holds about 37 securities in its basket with each accounting for less than 5% share. It has amassed more than $1.1 billion in its asset base and trades in heavy volume of around 2.2 million shares. Expense ratio comes in at 0.35%. XHB has a Zacks ETF Rank of 3 with a High risk outlook.


Retail will also benefit from accelerating job growth and a rise in wages that will increase the consumer spending power. XRT tracks the S&P Retail Select Industry Index, holding 103 securities in its basket. It is widely spread across each component as none of these holds more than 1.30% of total assets. The product is the most popular and actively traded ETF in the retail space with AUM of about $286.6 million and average daily volume of around 4.4 million shares. It charges 35 bps in annual fees. The fund has a Zacks ETF Rank of 1 or ‘Strong Buy’ rating with a Medium risk outlook (read: Retail ETF Hits New 52-Week High).

Stocks to Consider

Though several sectors will benefit from healthy hiring, the direct beneficiary is the staffing industry. The industry is well positioned at least for the near term given the superb Zacks Industry Rank (in the top 24%) at the time of writing. Investors seeking to ride out the optimism could look at a few top-ranked stocks having a Zacks Rank #1 (Strong Buy) or #2 (Buy) and a Growth Style Score of B or better using the Zacks Stock Screener.

Robert Half International Inc (RHI - Free Report)

Based in Menlo Park, California, Robert Half is an industry leader worldwide in professional consulting and staffing services. The company is expected to deliver earnings growth of 3.8% for 2017 and has a Zacks Rank #2 and a Growth Style Score of B.

Staffing 360 Solutions Inc. STAF

Based in New York, Staffing 360 Solutions is engaged in a global buy-and-build strategy through the acquisition of staffing organizations in the U.S. and UK. The stock is expected to post earnings at a growth rate of 72.2% annually for the fiscal year ending May 2017. This is above the industry average of 7.82%. STAF has a Zacks Rank #2 and a Growth Style Score of A (read: 5 Sector ETFs & Stocks Likely to See a Great Year).

Tarena International Inc. TEDU

Based in Beijing, the People’s Republic of China, Tarena International is a leading provider of professional education services in China with core strength in information technology professional education services including classroom training. Tarena has a solid earnings growth projection of 31.3% for 2017 compared with the industry average of 7.8%. The stock has a Zacks Rank #2 and a Growth Style Score of B.

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