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5 Sector ETFs to Benefit Despite Downbeat September Jobs Data

The U.S. economy added 194,000 jobs in September 2021, the lowest so far this year and well below forecasts of 500,000.

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This story originally appeared on Zacks

The U.S. economy added 194,000 jobs in September 2021, the lowest so far this year and well below forecasts of 500,000. Nonfarm employment has increased by 17.4 million since a recent trough in April 2020 but is down by 5.0 million, or 3.3%, from its pre-pandemic level in February 2020.

- Zacks

“Recent employment changes are challenging to interpret, as pandemic-related staffing fluctuations in public and private education have distorted the normal seasonal hiring and layoff patterns,” the Bureau of Labor Statistics said in the release, as quoted on tradingeconomics.

While the unemployment rate dropped more than expected to 4.8%, the labor force participation rate also declined to 61.6% from 61.7% in August. The average hourly earnings also grew faster to reach a 4.6% year-over-year rate, or the fastest since February.

Below we have highlighted some of these that will likely see smooth trading in the days ahead.

ETFs in Focus

Leisure and Hospitality

In September, notable job gains (+74000) occurred in leisure and hospitality. Employment in food services and drinking places changed little for the second successive month compared with an average monthly gain of 197,000 from January through July. Employment in leisure and hospitality is down by 9.4% since February 2020. The data makes Invesco Dynamic Leisure and Entertainment ETF PEJ a timely investment.

Retail Trade

Last month, retail employment grew by 56,000. Employment gains were palpable in clothing and clothing accessories stores (+27,000), general merchandise stores (+16,000), and building material and garden supply stores (+16,000). These gains were partially offset by a loss in food and beverage stores (-12,000). Retail trade employment is 202,000 lower than its level in February 2020. The data makes SPDR S&P Retail ETF XRT a timely investment.

Transportation and Warehousing

Employment in transportation and warehousing rose by 47,000 in September, in line with gains in the previous two months. In September, job gains continued in warehousing and storage (+16,000), couriers and messengers (+13,000), and air transportation (+10,000). Employment in transportation and warehousing is 72,000 above its pre-pandemic level in February 2020.

Generally, transportation companies are busier when economic activity picks up, leading to strong demand for movement of goods across many economic sectors. iShares Transportation Average ETF IYT and SPDR Transportation ETF XTN are two ETFs to cash in on this boom.

Information Technology

Employment in the information industry increased by 32,000 in September. Job additions in motion picture and sound recording industries (+14,000); in publishing industries, except Internet (+11,000); and in data processing, hosting, and related services (+6,000) were noticed. Employment in information is still down by 108,000 since February 2020. John Hancock Multifactor Media & Communications ETF JHCS can be played to tap the momentum.

Manufacturing

About 26,000 jobs were created in the sector in the month. Gains were palpable in fabricated metal products (+8,000), machinery (+6,000), and printing and related support activities (+4,000). Obviously, such positive data makes us keep a close watch on Industrial Select Sector SPDR ETF XLI.



Tech IPOs With Massive Profit Potential

In the past few years, many popular platforms and like Uber and Airbnb finally made their way to the public markets. But the biggest paydays came from lesser-known names.

For example, electric carmaker X Peng shot up +299.4% in just 2 months. Think of it this way…

If you had put $5,000 into XPEV at its IPO in September 2020, you could have cashed out with $19,970 in November.

With record amounts of cash flooding into IPOs and a record-setting stock market, this year’s lineup could be even more lucrative.

See Zacks Hottest Tech IPOs Now >>



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

 

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

 

iShares U.S. Transportation ETF (IYT): ETF Research Reports

 

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

 

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

 

SPDR S&P Transportation ETF (XTN): ETF Research Reports

 

John Hancock Multifactor Media and Communications ETF (JHCS): ETF Research Reports

 

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Zacks Investment Research