Job Gains Hit 100-Month Mark: 5 Business Services Picks

In January, U.S. job additions widely exceeded expectations, indicating that the economy retains sufficient steam even after a decade-long expansion. The spurt in jobs gains came despite the recent partial government shutdown. However, the shutdown did cause the employment rate to tick marginally higher.

Job additions for the last two months were also collectively revised downward. However, the three-month average remains above the trend likely at such a late point in economic expansion.

Leisure and hospitality, construction, healthcare, and retail trade led job gains. However, professional and business services have contributed the largest number of jobs over the past year. This is why it makes sense to add stocks from this domain to your portfolio.

Shutdown Raises Unemployment, Wage Gains Inch Higher

Though the recent government shutdown had no discernible impact on job gains, unemployment did inch higher. The rate of joblessness inched up from 3.9% to 4%, a pace it was last at in June 2018. This metric has been moving steadily higher since hitting a 50-year low of 3.7% last fall.  

The Department of Labor said that the shutdown had no material impact on the jump in hiring last month. In fact, government officials said federal workers were employed through the period since they received pay for the second week of January. Federal government employment actually increased by 1,000.

Wage growth remained sluggish, with average hourly earnings increasing 0.1%, coming in below the projected level of 0.3%. However, the year-over-year increase came in at 3.2%, close to the highest levels experienced during the recovery. The Federal Reserve is refraining from aggressive rate hikes since these wage increases haven’t significantly fueled inflation.

Professional and Business Services Post Highest Yearly Gains

The economy added 304,000 jobs in January, significantly higher than the consensus estimate of 154,000. In comparison, the economy added 223,000 jobs per month in 2018 on average, the strongest in three years. These gains have come despite indications from several quarters that the economy is near full employment.

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Moon Kil Woong 10 months ago Contributor's comment

The small and mid sized businesses in the US are doing well. Although this is not spoken of much it is these companies not the manufacturing sector that is buoying the economy. This is caused by the Republican tax cut and not much else.

Leslie Miriam 10 months ago Member's comment

I agree.