5 Business Services Stocks To Buy As Job Gains Rebound

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.

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