Back to top

Image: Bigstock

3 Sector ETFs & Stocks to Win on Upbeat January Jobs Data

Read MoreHide Full Article

The U.S. jobs report for the month of January came in stronger than expected. The January non-farm payroll reading of 225,000 was well above the estimated 160,000 as well as the upwardly-revised December reading of 147,000. Also, the change in total nonfarm payroll employment for November was revised up by 5,000 to 261,000. Revisions for November and December combined were 7,000 higher than previously reported, per tradingeconomics.

Overall, the unemployment rate was 3.6% in the month. Average hourly earnings picked up to 3.1% from a year before versus 2.9% in December. Average hourly earnings for all employees on private nonfarm payrolls increased by 7 cents to $28.44. Wage growth has been below the pace that economists would like to see for a strong labor market.

Against this backdrop, investors may 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.

Health Care

Health care added 36,000 jobs in the month. Health care employment increased by 361,000 in a year’s time. This is one of the sectors which have been adding jobs continuously. The January job gains occurred in ambulatory health care services (+23,000) and hospitals (+10,000).

The fund iShares U.S. Healthcare Providers ETF (IHF - Free Report) should thus benefit. The index of the fund looks to track stocks of health maintenance organizations, hospitals, clinics, dentists, opticians, nursing homes, etc. The fund has a Zacks Rank #3 (Hold) (read: Trump Budget 2021 Likely to Impact These Sector ETFs).

Investors can also take a look at Zacks Rank #3 HCA Healthcare Inc. (HCA - Free Report) as well. The company is the largest non-governmental operator of acute care hospitals in the United States.

Construction

This sector created 44,000 jobs in January. Job growth was witnessed in both the residential (+18,000) and nonresidential (+17,000) components. The sector added an average of 12,000 jobs per month last year.  Invesco Dynamic Building & Construction ETF (PKB - Free Report)  has a Zacks Rank #3 (read: Should You Buy Homebuilder ETFs Now?).

Our chosen stock is D.R. Horton Inc. (DHI - Free Report) . This home building and construction company has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Leisure & Hospitality

About 36,000 jobs were created in the sector in the month. The industry has added 288,000 jobs in the past six months, per the source.

Obviously, such positive data makes us keep a close watch on Invesco Dynamic Leisure And Entertainment ETF (PEJ - Free Report) . The underlying Dynamic Leisure & Entertainment Intellidex Index comprises stocks of U.S. leisure and entertainment companies. The fund has a Zacks ETF Rank #3.

In this regard, one can take a look at the Zacks Rank #2 restaurant stock, Chipotle Mexican Grill Inc. (CMG - Free Report) .

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>