5 Great Business Services Stocks To Buy Ahead Of Q1 Earnings

As markets growth increasingly volatile, fueled primarily by inflationary fears, it is easy to forget that the economy remains on a firm footing. Fresh evidence of this fact was provided by the ADP report for April which revealed that job additions had come in above 200,000 for the six straight month. Incidentally, professional and business services contributed nearly half of all the job additions experienced during April.

Moreover, the outlook of the business services sector is firmly tied to the broader economy. It is widely expected that the business-friendly approach of the Trump administration will provide a further boost to the U.S. economy.

Further, earnings and revenues from the sector are likely to improve in the first quarter, which makes it a good idea to pick up select business services stocks which are also slated to outperform their earnings estimates.

Professional and Business Services Lead Job Additions

In April, private sector job additions came in at 204,000, according to a report from ADP and Moody's Analytics. The figure was in line with most expectations, though it does represent a decline from the 228,000 additions made in March, revised downward from the initial figure of 241,000.

According to co-head of the ADP Research Institute, Ahu Yildirmaz, job additions made by the professional and business services sector “accounted for more than half of all jobs” added during April. At 58,000, the figure is much higher than the number of jobs added by education and health or leisure and hospitality, which amounted to 39,000 and 36,000, respectively.

This is yet another indicator of the growing importance of the business services sector, particularly in the United States and the greater North American region. According to the Professional Services Global Market Report for 2018, North America contributed 37% of total demand for professional services in 2017. This was likely due to huge demand for legal, accounting and other professional services across all major business sectors.

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