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Job Growth Almost Halts in US: Sector ETFs in Focus

Sanghamitra Saha

U.S. employers added only 20,000 new jobs in February, after an upwardly revised 311,000 in January. The number fell below market expectations of 180,000. It was the lowest job gain since February 2017, per trading economics.

The unemployment rate dropped to 3.8%. In addition, annual wage growth came in at the best since 2009. The economy created 12,000 more jobs in December and January than previously reported, reaching a total of 538,000. Average hourly earnings rose by 11 cents to $27.66, after a two-cent gain in January. Over the year, average hourly earnings increased 3.4%.

Against this mixed backdrop, investors can consider betting on ETFs that are the beneficiaries of the February jobs data report. Below we have highlighted some of these that will likely see smooth trading in the days ahead. We also highlight the sector that might underperform in the light of a weak jobs report.



New job additions jumped by 21,000 in the sector in February, wherein ambulatory healthcare services added 16,000. The segment has been creating solid jobs for a few months in a row. The sector, overall, saw an annual increase of 361,000 jobs. Health Care Select Sector SPDR Fund XLV thus comes across as a solid bet. The fund has a Zacks Rank #1 (Strong Buy) (read: Best ETF Ideas for 2019).


Manufacturing employment grew 4,000 in February, after witnessing an increase by an average of 22,000 per month over the past one year. A likely trade truce between the United States and China is also going to favor the industry. Vanguard Industrials ETF VIS, a Zacks Rank #1 ETF, is made up of stocks of large, mid-sized, and small U.S. companies within the industrials sector (read: Industrial ETFs Stay Strong Despite Mixed Earnings).

Leisure and Hospitality

In February, employment in leisure and hospitality was the same, after job gains of 89,000 and 65,000 in January and December, respectively. Leisure and hospitality has added 410,000 jobs, over the past year. Invesco Dynamic Leisure And Entertainment ETF PEJ, with a Zacks Rank #3 (Hold), can be appropriate to tap the decent condition of the leisure industry (read: Time to Tap Disney ETFs Post Earnings?). 



Employment in construction dropped 31,000 in February, after an increase of 53,000 in January. In February, employment declined in heavy and civil engineering construction by 13,000. Over the year, construction has added 223,000 jobs.

However, the construction industry is said to be weather-sensitive and this underperformance could be a one-off scenario. Invesco Dynamic Building & Construction ETF PKB, with a Zacks Rank #4 (Sell), should thus be steered clear of in the near term.

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Invesco Dynamic Leisure and Entertainment ETF (PEJ): ETF Research Reports
Vanguard Industrials ETF (VIS): ETF Research Reports
Health Care Select Sector SPDR Fund (XLV): ETF Research Reports
Invesco Dynamic Building & Construction ETF (PKB): ETF Research Reports
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