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Winning & Losing Sector ETFs From June Jobs Data

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U.S. employers added 213,000 new jobs in June, after an upwardly revised 244,000 in May. The number breezed past market expectations of 195,000. However, the unemployment rate rose to 4% last month, higher than market expectations of 3.8%. Average hourly earnings rose by 5 cents to $26.98. Over the year, average hourly earnings 2.7%.

Winning Sector ETFs

Against this backdrop, investors should bet on ETFs that are the largest beneficiaries of the June jobs data report. Below we have highlighted some of these that will likely see smooth trading in the days ahead.

Manufacturing

Last month, manufacturing employment grew by 36,000, courtesy of a gain in durable goods industries. This was expected as the U.S. manufacturing sector ended June on a high note as production and inventories grew faster (read: U.S. Manufacturing in the Pink: How Long Will ETFs Gain?).

Though the Fed sounds hawkish, interest rates are still at manageable levels. Notably, a low interest rate environment favors the industry as the sector depends on interest rates for its operations.

Plus, the Trump administration is now eyeing infrastructure reform. Over the past year, the sector recorded 285,000 job gains. All these factors make Invesco S&P SmallCap Industrials Portfolio (PSCI - Free Report) a timely investment. The fund has a Zacks Rank #2 (Buy).

The fund targets small-cap companies from industrial products and services, including engineering, heavy machinery, construction, electrical equipment, aerospace and defense and general manufacturing.

Health Care

Jobs in the health care sector grew by 25,000 in the month, wherein ambulatory health care services and hospitals added 14,000 and 11,000, respectively. Per tradingeconomics, health care employment rose 309,000 over the past year.

This trend puts the spotlight on First Trust Health Care AlphaDEX Fund (FXH - Free Report) . The 77-stock fund is heavy on Health Care Providers & Services (35.77%) and Health Care Equipment & Supplies (29.39%). Biotechnology takes the third position in the fund with about 13.18% focus. The fund charges 62 bps in fees. The fund has a Zacks Rank #2 (read: Want to Tap Merger Mania? Play Top-Ranked Health Care ETFs).

Construction

As per tradingeconomics, about 13,000 jobs were created in the construction sector in the month. Over a year, the sector has generated about 282,000 jobs. Obviously, such upbeat data makes us keep Invesco Dynamic Building & Construction ETF (PKB - Free Report) on the radar.

The underlying index of the fund picks building and construction stocks on the basis of factors like price momentum, earnings momentum, quality, management action and value. The fund has a Zacks Rank #3 (Hold) (read: Homebuilder ETFs in Focus on Solid New Home Sales Data).

Losing Sector ETFs

Here we highlight sectors that did not score well in the jobs report.

Retail 

Retail lost 22,000 jobs, after a gain in May (+25,000). VanEck Vectors Retail ETF (RTH - Free Report) should thus be watched closely.

Utilities 

Another sector that is on a losing streak is utility. The sector lost about 1400 jobs in May and 300 jobs in June. Utilities Select Sector SPDR Fund (XLU - Free Report) has a Zacks Rank #5 (Strong Sell) (read: Should You Steer Clear of These Sector ETFs for Now?).

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