5 Sector ETFs That Show Promise After August Jobs Data

The U.S. economy added 315,000 jobs in August of 2022, slightly below the Dow Jones estimate for 318,000 and way lower than the 526,000 jobs created in July and the lowest monthly gain since April 2021.

The unemployment rate increased to 3.7%, two-tenths of a percentage point higher than expectations, largely due to a gain in the labor force participation rate to 62.4%. Wages continued to increase, though slightly less than expectations. Average hourly earnings rose 0.3% for the month and 5.2% from a year ago, both 0.1 percentage point below estimates.

Below, we have highlighted some of the sectors that will likely see smooth trading in the days ahead in light of the August jobs data.

Healthcare

Employment in the healthcare industry increased by 48,000 in August. Job gains occurred in physicians (+15,000), hospitals (+15,000), and nursing and residential care facilities (+12,000). Employment in health care is down by 0.2%, from its level in February 2020. Health care has added 412,000 jobs over the year. The Zacks Rank #1 fund Health Care Select Sector SPDR ETF XLV can be played to tap the momentum.

Retail

Employment in retail trade was decent in August (+44,000). About 422,000 jobs were created over the past 12 months. In August, employment rose in general merchandise stores (+15,000), food and beverage stores (+15,000), health and personal care stores (+10,000), and building material and garden supply stores (+7,000). SPDR S&P Retail ETF XRT has a Zacks Rank #2 with a Medium risk outlook deserves a look.

Manufacturing

Employment in manufacturing (+22,000) was upbeat in August. Employment in manufacturing increased by 461,000 over the past one year. Industrial Select Sector SPDR ETF XLI has a Zacks Rank #2 with a Medium risk outlook.

Mining

Employment in mining rose by 6,000 in August, reflecting a gain in support activities for mining (+7,000). Over the year, mining has added 68,000 jobs. SPDR S&P Metals & Mining ETF XME can thus be considered for a play.

Leisure

Employment in leisure and hospitality changed little in August (+31,000), following average monthly gains of 90,000 in the first seven months of the year. Employment in leisure and hospitality is below its February 2020 level by 1.2 million, or 7.2%.

The data makes Invesco Dynamic Leisure and Entertainment ETF PEJ a timely investment. The fund has a Zacks Rank #3 (Hold) with a High risk outlook.

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Industrial Select Sector SPDR ETF (XLI): ETF Research Reports

Health Care Select Sector SPDR ETF (XLV): ETF Research Reports

SPDR S&P Retail ETF (XRT): ETF Research Reports

SPDR S&P Metals & Mining ETF (XME): ETF Research Reports

Invesco Dynamic Leisure and Entertainment ETF (PEJ): ETF Research Reports

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