U.S. Job Additions Exceed Expectations: 4 Fund Picks

Following a great show in May, jobs data remained upbeat in June. Job creations last month was significantly higher than the expected figure. Steady gains in employment pushed workers’ pay higher, with average hourly wages increasing. The unemployment rate, did, increase from May’s 18-year low, but the reason was mainly due to a surge in the labor force participation rate.

A rise in workforce participation rate and slower growth in average hourly wages indicated expansion in the labor market. Moreover, a better-than-expected jobs report indicated a rosier economy and secured chances of more rate hikes in the coming months.

Sectors like construction, manufacturing, healthcare, and mining, and private service providers witnessed strong job gains. In this context, investing in mutual funds with significant exposure to these sectors is considered a strong investment choice.

June’s Job Additions Beat Estimate

Domestic non-farm payrolls advanced by 213,000 in June, significantly higher than the consensus estimate of 196,000, per the United States Bureau of Labor Statistics (BLS). Moreover, the BLS reported that April's job numbers was revised up by 16,000 to 175,000, while May's figure was upwardly revised by 21,000 to 244,000.

Meanwhile, average hourly earnings rose by 0.2% or 5 cents to $26.98 in June, lower than the consensus estimate and May’s figure of an increase of 0.3%. Further, the unemployment rate rose by 0.2% to 4% in June.

However, the unemployment rate increased slightly only because the labor force participation rate in June was 62.9%, reflecting a 0.2% increase from the prior month. Improvement in employment and gradual wage growth, with older workers retiring and leaving the labor force, has boosted the job participation rate.

Industries That Experienced Job Gains

The manufacturing industry added around 36,000 jobs last month, posting its best job growth since last December. The sector advanced by 285,000 in the past 12 months. Strong jobs gains in the manufacturing industry were supported by motor vehicles and parts industry, which created 12,000 new jobs, its highest since last August.

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