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Jobs Market Strengthening Fast: 4 Sector ETFs & Stocks to Buy

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The U.S. jobs market continued to gain strength in June, showing signs of a V-shaped recovery from the coronavirus-led slump. The U.S. economy unexpectedly added 4.8 million jobs in June, breezing past economists’ expectations of job gains of 2.9 million. Jobs growth marked a solid jump from 2.7 million in May, which was revised upward by 190,000.

Overall, the unemployment rate was 11.1% in the month of June, again better than the estimate of 12.4%. Number of workers on temporary layoff dropped by 4.8 million in June to 10.6 million after a reduction of 2.7 million in May.

Average hourly earnings for all employees on private nonfarm payrolls dropped by 35 cents to $29.37. However, the figure is still up 5% from a year ago. Overall, if the momentum of the job market is sustained, we believe that the second half of the year would be robust.

Winning Sector ETFs

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

Leisure and Hospitality

Employment in leisure and hospitality gained by 2.1 million, making about two-fifths of the gain in total nonfarm employment. Food services and drinking places (+1.5 million) was the most beneficial industry, replicating the gains of the same measure recorded last month. However, employment in food services and drinking places is still down by 3.1 million since February – which was before lockdown period. Job gains in amusements, gambling, and recreation (+353,000), and in the accommodation industry (+239,000) were also notable in June (see all Consumer Discretionary ETFs here).

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.

Cracker Barrel Old Country Store Inc. (CBRL - Free Report) – The Zacks Rank # 2 (Buy) company is engaged in the ownership and operation of full-service restaurants with a restaurant and a retail store in the same unit.


In June, retail employment gained by 740,000, following a gain of 372,000 in May. It recouped some of the steep job losses occurred in March and April (2.4 million). Overall, employment in the retail industry is still 1.3 million lower than in February. Considerable job gains occurred in clothing and clothing accessories stores (+202,000), general merchandise stores (+108,000) and furniture and home furnishings stores (+84,000).

SPDR SP Retail ETF (XRT - Free Report) – The underlying S&P Retail Select Industry Index represents the retail sub-industry portion of the S&P TMI. Apparel Retail makes up about 17.26% of the fund. The fund has a Zacks Rank #2 (read: 4 Sector ETFs for July).

Buckle Inc. The (BKE - Free Report) – The Zacks Rank #2 company is a leading retailer of medium to better-priced casual apparel, footwear, and accessories for fashion-conscious young men and women.


Manufacturing employment increased by 356,000, but it is still off by 757,000 from February. Much of the gain occurred in motor vehicles and parts (+196,000), making up over half of the job gain in manufacturing. Miscellaneous durable goods manufacturing (+26,000) and machinery (+18,000) also saw an uptick in employment.

Industrial Select Sector SPDR Fund (XLI - Free Report) – The fund looks to provide precise exposure to  companies in the following industries: aerospace and defense; industrial conglomerates; marine; transportation infrastructure, machinery; road and rail; air freight and logistics; commercial services and supplies.

Applied Industrial Technologies Inc. (AIT - Free Report) – The Zacks Rank #1 company is a distributor of value-added industrial products — including engineered fluid power components, bearings, specialty flow control solutions, power transmission products and miscellaneous industrial supplies.

Health Care

Jobs in the health care sector grew by 358,000 in the month, with gains in offices of dentists (+190,000), offices of other health practitioners (+80,000) and offices of physicians (+48,000) grabbing the spotlight.

Health Care Select Sector SPDR Fund (XLV - Free Report) – The underlying Health Care Select Sector Index includes companies from the following industries: pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.

West Pharmaceutical Services Inc. (WST - Free Report) – The Zacks Rank #2 company is a designer and manufacturer of injectable pharmaceutical packaging and delivery systems.

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