In June, job additions recovered substantially from the severe slump experienced in the preceding month. Hiring widely exceeded estimates, putting to rest fears that the economy was headed for a slowdown. Gains were largely broad-based, with only retailers shedding jobs during the month. Once again, healthcare and professional and technical services emerged as the leading recruiters.
A strong jobs report brings mixed tidings for investors. On the one hand, it reduces chances of a near-term rate cut by the data-dependent Federal Reserve. On the other hand, it does indicate that the labor market is still robust even as economic expansion moves into fresh record territory. Investing in business services stocks, the top hiring sector in June, looks prudent now.
Hiring Recovers, Unemployment Close to 50-Year Low
The U.S. economy added 224,000 jobs in June, easily exceeding the consensus estimate of 161,000. However, May’s dismal hiring numbers were revised marginally downward, from 75,000 to 72,000. Also, at 172,000, average job additions for the first half of 2019 were lower than 223,000 registered last year.
However, the decline in job growth does not detract from the fact that the economy is continuing to create jobs at a steady pace so far into the expansion. Meanwhile, the unemployment rate inched up from 3.6% to 3.7% as 335,000 individuals joined the workforce.
The U6 unemployment rate, which includes people forced into part-time work and those only sporadically looking for jobs, edged up by 0.1% to 7.2%. However, the labor force participation rate, a gauge of the share of working-age Americans, who are employed or looking for a position, increased from 62.8% to 62.9%.
Healthcare, White-Collar Firms Lead Hiring
June’s gains were largely broad-based. Manufacturing added 17,000 jobs, a development which comes as a major boost to President Trump for whom the sector has been a priority. The increase is notable since the sector contributed only 3,000 jobs in both April and May, preceded by a contraction in March.
Meanwhile, construction companies added 21,000 workers. Transportation and warehousing added 24,000 jobs in June and have created 158,000 positions in the past 12 months. While 7,000 more couriers and messengers were added, hiring in air transportation increased by 3,000.
Healthcare, and professional and technical services continued to lead jobs gains. Employment in healthcare increased by 35,000 jobs in June and by 403,000 in the past 12 months. While ambulatory health care services added 19,000 positions, hospitals recruited 11,000 more employees.
Professional and technical services added 51,000 jobs last month. A spurt in hiring in the consulting and computer system design domains is primarily powering jobs growth for the sector. The sector has created 303,000 jobs over the past 12 months.
June’s jobs report will go a long way in allaying fears that the U.S. economy is headed for a slowdown. Market watchers think it is heartening that steady job gains are continuing to flow in even as economic expansion chugs along. With trade tensions ebbing, better times could lie ahead for the economy.
This is why it makes good sense to add business services stocks to your portfolio. 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 based on a good Zacks Rank and VGM Score.
Core-Mark Holding Company, Inc. CORE is one of the largest marketers of fresh and broad-line supply solutions to the convenience retail industry in North America.
Core-Mark has a Zacks Rank #1 (Strong Buy) and VGM Score of A. The company’s expected earnings growth for the current year is 13.9%.
Limbach Holdings, Inc. LMB is a provider of commercial specialty contract services in the United States.
Limbach has a Zacks Rank #1 and VGM Score of B. The company’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 35.4% over the past 60 days.
NV5 Global, Inc. NVEE offers professional, technical consulting and certification solutions for public and private sector.
NV5 Global has a VGM Score of B. The company’s expected earnings growth for the current year is 17.9%. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Booz Allen Hamilton BAH is a provider of management and technology consulting, analytics, engineering, digital solutions, mission operations and cyber expertise to the United States and international governments, corporations plus not-for-profit organizations.
Booz Allen has a Zacks Rank #2 (Buy) and VGM Score of A. The company has expected earnings growth of 9.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.7% over the past 60 days.
Broadridge Financial BR is a global financial technology company that offers investor communications and technology-driven solutions to banks, broker-dealers, asset managers and corporate issuers.
Broadridge has a Zacks Rank #2 and VGM Score of B. The company has expected earnings growth of 9.5% for the current year.
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>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Core-Mark Holding Company, Inc. (CORE) : Free Stock Analysis Report
NV5 Global, Inc. (NVEE) : Free Stock Analysis Report
Broadridge Financial Solutions, Inc. (BR) : Free Stock Analysis Report
Booz Allen Hamilton Holding Corporation (BAH) : Free Stock Analysis Report
Limbach Holdings, Inc. (LMB) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research