Recent data from the US labour market seem remarkably positive. However, when we look at them from a broader perspective, we see that the situation may not be optimistic in all industries. We will try to identify these industries and their prospects.
Nonfarm Payrolls report
In November this year, employment in the non-farm sector increased by 263,000 jobs (200,000 was expected) compared to the previous data, in which the increase was 284,000. The data gave an unemployment rate of 3.7%, which is historically one of the lowest readings for this indicator. Recall that prior to the 'DOTCOM' crisis in 2000, unemployment reached 3.9% (6.3% during the crisis). Before the 2008 real estate crisis, the figure was at 4.4% (during the crisis 10.2%) and before the 2020 pandemic crisis. - 3.5% (during 14.7%).
The highest number of unemployed people is in the leisure and hospitality sector: 769,000 (down 219,000 y-o-y), and the unemployment rate for this sector now stands at 5.8%. The largest percentage decrease in unemployment - down 5.5 percentage points y-o-y, to 3.1%. - we saw in the mining and oil and gas extraction sector. The number of unemployed in this sector now stands at 19 000, which seems unsurprising given the listing of the Energy Select Sector SPDR Fund (XLE), which replicates the situation of energy companies in the United States whose performance could be strongly linked to commodity prices.
Source: Conotoxia MT5, XLE, Daily
Where is the blood pouring in the economy?
From the month-on-month comparative report for all sub-types of sectors, we learn that unemployment increased in 71% of them, with the largest increase - by as much as 2% m/m. - occurred in the film and sound recording industry. Unemployment in the information sector as a whole rose by 0.62% m/m. In second place in terms of unemployment growth was the logging industry, where the rate increased by 1.8% m/m. (for the mining and logging sector as a whole, an increase of 0.47%). Third in this respect is the miscellaneous computer and electronic products sales industry, with an increase in unemployment of 1.57% m/m. (For the sector, it was an increase of 0.17%). It seems that, based on this data, we could expect a deterioration in these sectors. An example of a fund giving exposure to one of the sectors that may suffer the most is the Invesco Dynamic Media ETF (PBS), which gives exposure to the media market.
Source: Conotoxia MT5, PBS, Weekly
From Crunchbase, a website that tracks reported staff cuts by companies in the technology sector, we can learn that companies have reported layoffs of more than 70,000 people since June this year. The largest cuts were seen at Meta Platforms (Facebook), which reduced its workforce by 13% (11,000 employees).
Source: Conotoxia MT5, Facebook, Weekly
Which industries are booming the most?
Interestingly, the biggest drop in unemployment - by 2.3% - was in commercial warehousing. This was followed by the courier industry, where unemployment fell by 1.12% m/m. (for the transport sector, a decrease of 0.2%). The general merchandise shops industry reduced its unemployment by 1% m/m. (for the retail sector a decrease of 0.2%).
Grzegorz Dróżdż, Junior Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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