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5 Sector ETFs & Stocks to Shine on Upbeat December Jobs Data

Sanghamitra Saha
Durable Goods Orders Tumble in April

U.S. employers added 312,000 new jobs in December, after an upwardly revised 176,000 in November. The number breezed past market expectations of 177,000. The December jobs gain took total U.S. employment to above 150 million for the first time.

The unemployment rate, however, increased to 3.9% last month from a 49-year low of 3.7% in November, and above market expectations of 3.7%. Average hourly earnings rose by 11 cents to $27.48. Over the year, average hourly earnings increased 3.2%.

Winning Sector ETFs

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

Health Care

Jobs in the health care sector grew by 50,000 in the month, wherein ambulatory health care services and hospitals added a respective 38,000 and 7,000. Per tradingeconomics, health care employment rose by 346,000 in 2018 and by 284,000 in 2017.

This trend puts the spotlight on First Trust Health Care AlphaDEX Fund FXH. The fund has considerable exposure to Health Care Providers & Services and Health Care Equipment & Supplies. Biotechnology also has substantial focus on this Zacks Rank #2 fund.

Investors should also place their bet on HCA Healthcare Inc. HCA, a Zacks Rank #2 non-governmental hospital in the United States, providing health care and related services (read: 3 Sector ETFs to Bet On Despite Soft November Jobs Data).

Food & Beverage Places

In the Christmas month, employment in food services and drinking places rose by 41,000. Over the year, the industry added 235,000 jobs, almost in line with the rise in 2017 (+261,000). Invesco Dynamic Food & Beverage ETF PBJ), though with a Zacks ETF Rank #4 (Sell), may see some solid trading in the near term after the jobs report. The Zacks Rank #2 global food company Campbell Soup Company CPB can also be tapped by investors.

Construction

Per tradingeconomics, about 38,000 jobs were created in the construction sector in the month. Over a year, the sector has generated about 280,000 jobs, followed by an increase of 250,000 in 2017. Obviously, such upbeat data makes us keep  close watch on Invesco Dynamic Building & Construction ETF PKB. The underlying index of the fund picks building and construction stocks on the basis of factors like growth, stock valuation and investment timeliness.

Great Lakes Dredge & Dock Corporation GLDD, a Zacks Rank #1 (Strong Buy), provider of dredging services in the United States, is our stock pick in the construction segment.

Manufacturing

Last month, manufacturing employment grew by 32,000, courtesy of a gain in durable goods industries (+19,000). There were considerable upticks in the fabricated metal products (+7,000) and in the computer and electronic products (+4,000) and in the nondurable goods component (+13,000). Manufacturing has created 284,000 jobs over the year andhad created 207,000 jobs in 2017.

All these data points make iShares U.S. Industrials ETF (IYJ) a timely investment. The fund focuses on construction & materials, aerospace & defense, general industrials, electronic & electrical equipment, industrial engineering, industrial transportation & support services sectors.

Enersys(ENS), a Zacks Rank #2 global leader in stored energy solutions for industrial applications, should also see smooth sailing in the days to come.

Retail

There were 24,000 job additions in retail trade in December. Within the industry, general merchandise stores saw 15,000 job growth and automobile dealers saw another 6,000 additions. Retail trade employment increased by 92,000 in 2018.

December jobs reports put VanEck Vectors Retail ETF RTH and First Trust NASDAQ Global Auto Index Fund (CARZ) in focus. As long as stocks are concerned, investors can bet on Zacks Rank #1 (Strong Buy) convenience store Caseys General Stores Inc. CASY and America's Car-Mart Inc. CRMT, one of the largest automotive retailers in the United States (read: Auto Sales Surprisingly Up in 2018: ETF & Stocks to Buy).

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