As investors continue to grapple with trade tensions, they may well forget that the economy remains on a firm footing. Fresh evidence of this fact was provided by the official jobs report for June. Job additions came in above 200,000, defying predictions that gains would decline as the economy nears full employment.
Incidentally, professional and business services contributed the highest number of jobs. 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 that are also slated to outperform their earnings estimates.
Professional and Business Services Lead Job Additions
In June, job additions, came in at 213,000, according to the Department of Labor. The figure exceeded the consensus estimate of 196,000. Notably, monthly job additions have averaged 200,000 over the past one year. Job additions for April and May were revised upward by a combined 37,000.
Professional and business services accounted for the highest number of job additions. At 50,000, the figure is much higher than the number of jobs added by manufacturing, healthcare and construction, which totaled 36,000, 25,000 and 13,000, respectively. (Read: Profit From Strong Job Additions With These 5 Top-Ranked Picks)
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% to 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. (Read:Â 5 Great Business Services Stocks to Buy Ahead of Q1 Earnings)
Resilient Economy, Trump’s Policies to Aid Sector
Currently, the U.S. economy is on a firm footing with stable GDP levels, a robust employment scenario, and inflation hitting 2%. The Trump administration remains focused on improving the ease of doing business, exemplified by its tax cuts. It is widely expected that the government will pursue its agenda of deregulation aggressively.
