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3 Stocks to Benefit From the Steady Growth in Jobs

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Job growth moderated in October but maintained its strong footing as the U.S. economy tried to recover from COVID-19 woes. Per the latest data released by the U.S. Bureau of Labor Statistics, nonfarm payroll employment rose for the sixth month in a row. Job additions totaled 638,000 in October compared to the revised 672,000 jobs added in September.

Notably, the unemployment rate fell to 6.9% in October from 7.9% in September, marking the sixth consecutive month of decline. The number of people who were on temporary layoff also saw a decline of 1.4 million to 3.2 million. Moreover, the labor force participation rate also rose to 61.7% in October from 61.4% in September. The employment population ratio also saw an uptick of 57.4% from 56.6% reported in September.

Meanwhile, the establishment survey data showed the largest job addition of 271,000 for the leisure and hospitality sector despite COVID-19-related uncertainties. It was followed by growth of 208,000 jobs in professional and business services. Retail trade followed suit by adding 104,000 jobs. Electronics and appliances stores witnessed job additions of more than 31,000, and motor vehicles and parts dealers added 23,000 jobs. Reflecting the needs arising out of the pandemic, healthcare employment also witnessed a rise of 58,000, with hospitals offering the biggest chunk of the gains with 16,000 jobs added. Transportation and warehousing also saw 63,000 jobs being added while manufacturing employment recorded job additions of 38,000.

Steady job additions and a decline in the jobless rate highlight that economic activities are resuming and more people are going back to work. Reflective of this, the Business Activity Index recorded a rise for the fifth successive month in October, per the latest services purchasing manager’s index  report released by the Institute of Supply Management. The Business Activity Index came in at 61.2% compared to 63% growth in September.

3 Potential Gainers

The U.S. economy seems to be turning around from the lows of the early part of the year. Job additions continued to grow strongly despite moderating while unemployment rates fell steadily. Nevertheless, rising additions in nonfarm payroll makes it a prudent time to invest in staffing firm stocks which stand to benefit directly from this uptrend going forward. Hence, we have handpicked four such stocks that carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cross Country Healthcare, Inc. CCRN provides talent management and consultative services to healthcare clients in the United States. The Zacks Consensus Estimate for its current-year earnings increased more than 100% over the past 60 days. The company’s expected earnings growth rate for the current year is 53.3%.

Heidrick & Struggles International, Inc. HSII provides executive search and consulting services to businesses in the United States. The Zacks Consensus Estimate for its current-year earnings increased 22.8% over the past 60 days. The company’s expected earnings growth rate for the next year is 18.6%.

Insperity, Inc. NSP provides human resources and business solutions to small and medium-sized businesses. The Zacks Consensus Estimate for its current-year earnings increased 0.5% over the past 60 days. The company’s expected earnings growth rate for the next 5 years is 15%.

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