Private Payrolls Better-Than-Expected Highlights Strong Labor Market

Market investors are still watching whether the extended bull rally is on its last legs, but they’re waiting, the economic fundamentals still show signs of strength. Private payrolls rose by 291,000 during the month of January, which constituted its best month since May 2015, based on data from ADP and Moody’s Analytics.

The latest number bested the 150,000 estimate expected by economists surveyed by Dow Jones. Furthermore, data shows that the gap between full employment is still a good distance given that unemployment is at historically low levels.

Highlights of the latest jobs report:

  • Leisure and hospitality led with 96,000 new jobs
  • Education and health services contributed 70,000
  • Professional and business services added 49,000
  • Construction rose by 47,000, highlighting its best growth since the 62,000 added a year ago
  • Manufacturing was up 10,000, to notch its biggest monthly gain since last February
  • Services added 237,000 positions compared with 54,000 for goods producers
  • Trade transportation and utilities rose by 8,000
  • Information and financial activities sectors both contributed 2,000 each
  • Natural resources and mining saw a drop of 2,000

“Incredibly, the average unemployment rate under my administration is lower than any administration in the history of our country,” said U.S. President Donald Trump during his State of the Union address. “If we had not reversed the failed economic policies of the previous administration, the world would not now be witness to America’s great economic success.”

The Relative Trade in U.S. Equities

The strong labor market creates an opportunity for investors to capitalize on the Direxion FTSE Russell US Over International ETF (NYSEArca: RWUI). RWUI offers investors the ability to benefit not only from domestic U.S. markets potentially performing well but from their outperformance compared to international markets.

RWUI features:

  • Seeks investment results, before fees and expenses, that track the Russell 1000®/FTSE All-World ex-US 150/50 Net Spread Index (the “index”).
  • The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in securities that comprise the Long Component of the index or shares of ETFs on the Long Component of the index.
  • The index measures the performance of a portfolio that has 150% long exposure to the Russell 1000® Index (the “Long Component”) and 50% short exposure to the FTSE All-World ex-US Index (the “Short Component”).

Investors looking to play the other side can use the Direxion FTSE International Over US ETF (NYSEArca: RWIU)  to capitalize on international equities will outdoing U.S. equities. RWIU seeks investment results, before fees and expenses, that track the FTSE All-World ex US/Russell 1000 150/50 Net Spread Index, which measures the performance of a portfolio that has 150 percent long exposure to the FTSE All-World ex US Index and 50 percent short exposure to the Russell 1000® Index.

For more market trends, visit ETF Trends.