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Job Growth Breezes Past Estimates: 5 Business Services Picks
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In October, the unemployment rate remained flat at a 49-year low. However, job additions widely exceeded expectations, indicating that the economy remains robust late into the expansion. The spurt in job gains came after a disappointing September, during which fierce storms impeded job gains. However, job additions for August were revised significantly upward.
Meanwhile, wage gains exceeded 3% for the first time since the Great Recession ended in the middle of 2009. Job gains were led by healthcare, manufacturing and transportation and warehousing. However, professional and business services have contributed the largest number of jobs over the past year. This is why it makes sense to add stocks from this domain to your portfolio.
Unemployment Flat at 49-Year Low
Though job additions for October widely exceeded expectations, the unemployment rate remained flat at 3.7%, the lowest since December 1969. The U6 unemployment rate, which includes people forced into part-time work and people only sporadically looking for jobs, declined from 7.5% to 7.4%.
Additionally, the number of employed individuals increased to a record level of 156.6 million. The employment-population ratio increased by 0.2% to 60.6%, its highest level since December 2008. Also, the labor force participation rate increased by 0.2% to 62.9%.
Notably, the increase in the labor force participation rate was not accompanied by a jump in the number of unemployed persons, which remained flat at 6.1 million. The number of individuals not considered to be part of the labor force declined by 487,000 to 95.9 million.
Professional and Business Services Post Highest Yearly Gains
The economy added 250,000 jobs in October, significantly higher than the consensus estimate of 193,000. Over the last 12 months, the economy has added 211,000 jobs per month on average. These gains have come despite indications from several quarters that the economy is near full employment.
In September, job gains plummeted, primarily due to the effect of fierce storms such as Hurricane Florence. The figure was revised further downward from 134,000 to 118,000. However, this was totally offset by the upward revision in the August figure, which has been increased from 270,000 to 286,000.
At the forefront of job gains were healthcare, manufacturing, construction and transportation and warehousing, which added 36,000, 32,000, 30,000 and 25,000 jobs, respectively.
Professional and business services added 35,000 jobs. Notably, the industry has added 516,000 jobs over the past year, the highest among all those covered by the report from the Bureau of Labor Statistics.
Our Choices
The significant improvement in job additions for October indicates that the economy remains robust even at such a late point in the expansion. The unemployment rate remains flat at a record low even as the labor force participation rate inches up.
Overall professional and business services have provided the highest number of job additions over the past 12 months. Adding stocks from this sector looks like a smart choice at this point. However, picking winning stocks may be difficult.
This is where our VGM Score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.
Clean Harbors, Inc. (CLH - Free Report) is a leading provider of environmental, energy and industrial services in North America.
Clean Harbors has a VGM Score of A. The company’s projected growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 8.3% over the last 30 days.
CRA International Inc. (CRAI - Free Report) provides legal, regulatory, business consulting and other expert services through its specialized consultants across the globe.
CRA International has a VGM Score of A. The company’s projected growth rate for the current year is 21.5%.
Steelcase Inc. (SCS - Free Report) is a designer and manufacturer of products used to create high-performance work environments.
Steelcase has a VGM Score of A. The company’s expected earnings growth for the current year is 22.5%.
Heidrick & Struggles International, Inc. (HSII - Free Report) offers executive search, leadership consulting and culture shaping services on a worldwide basis.
Heidrick & Struggles has a VGM Score of B. The company’s projected growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 11.6% over the last 30 days.
Xerox Corporation (XRX - Free Report) is a leader in the development, manufacture, marketing, servicing and financing of document equipment across the world.
Xerox has a VGM Score of B. The Zacks Consensus Estimate for the current year has improved by 3.6% over the last 30 days.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Job Growth Breezes Past Estimates: 5 Business Services Picks
In October, the unemployment rate remained flat at a 49-year low. However, job additions widely exceeded expectations, indicating that the economy remains robust late into the expansion. The spurt in job gains came after a disappointing September, during which fierce storms impeded job gains. However, job additions for August were revised significantly upward.
Meanwhile, wage gains exceeded 3% for the first time since the Great Recession ended in the middle of 2009. Job gains were led by healthcare, manufacturing and transportation and warehousing. However, professional and business services have contributed the largest number of jobs over the past year. This is why it makes sense to add stocks from this domain to your portfolio.
Unemployment Flat at 49-Year Low
Though job additions for October widely exceeded expectations, the unemployment rate remained flat at 3.7%, the lowest since December 1969. The U6 unemployment rate, which includes people forced into part-time work and people only sporadically looking for jobs, declined from 7.5% to 7.4%.
Additionally, the number of employed individuals increased to a record level of 156.6 million. The employment-population ratio increased by 0.2% to 60.6%, its highest level since December 2008. Also, the labor force participation rate increased by 0.2% to 62.9%.
Notably, the increase in the labor force participation rate was not accompanied by a jump in the number of unemployed persons, which remained flat at 6.1 million. The number of individuals not considered to be part of the labor force declined by 487,000 to 95.9 million.
Professional and Business Services Post Highest Yearly Gains
The economy added 250,000 jobs in October, significantly higher than the consensus estimate of 193,000. Over the last 12 months, the economy has added 211,000 jobs per month on average. These gains have come despite indications from several quarters that the economy is near full employment.
In September, job gains plummeted, primarily due to the effect of fierce storms such as Hurricane Florence. The figure was revised further downward from 134,000 to 118,000. However, this was totally offset by the upward revision in the August figure, which has been increased from 270,000 to 286,000.
At the forefront of job gains were healthcare, manufacturing, construction and transportation and warehousing, which added 36,000, 32,000, 30,000 and 25,000 jobs, respectively.
Professional and business services added 35,000 jobs. Notably, the industry has added 516,000 jobs over the past year, the highest among all those covered by the report from the Bureau of Labor Statistics.
Our Choices
The significant improvement in job additions for October indicates that the economy remains robust even at such a late point in the expansion. The unemployment rate remains flat at a record low even as the labor force participation rate inches up.
Overall professional and business services have provided the highest number of job additions over the past 12 months. Adding stocks from this sector looks like a smart choice at this point. However, picking winning stocks may be difficult.
This is where our VGM Score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.
We have narrowed down our search to the following stocks, each of which has a Zacks Rank #1 (Strong Buy) and a good VGM Score. You can see the complete list of today’s Zacks #1 Rank stocks here.
Clean Harbors, Inc. (CLH - Free Report) is a leading provider of environmental, energy and industrial services in North America.
Clean Harbors has a VGM Score of A. The company’s projected growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 8.3% over the last 30 days.
CRA International Inc. (CRAI - Free Report) provides legal, regulatory, business consulting and other expert services through its specialized consultants across the globe.
CRA International has a VGM Score of A. The company’s projected growth rate for the current year is 21.5%.
Steelcase Inc. (SCS - Free Report) is a designer and manufacturer of products used to create high-performance work environments.
Steelcase has a VGM Score of A. The company’s expected earnings growth for the current year is 22.5%.
Heidrick & Struggles International, Inc. (HSII - Free Report) offers executive search, leadership consulting and culture shaping services on a worldwide basis.
Heidrick & Struggles has a VGM Score of B. The company’s projected growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 11.6% over the last 30 days.
Xerox Corporation (XRX - Free Report) is a leader in the development, manufacture, marketing, servicing and financing of document equipment across the world.
Xerox has a VGM Score of B. The Zacks Consensus Estimate for the current year has improved by 3.6% over the last 30 days.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>