Every month, SouthBay Research measures hiring at the individual company level for most of the Russell 1000. To get a sector view of hiring, we paralleled Blackrock’s iShares ETFs. Next, each company’s hiring was separately indexed and equally weighted. (The companies/stocks are listed at the end of this report.)
The conclusion we arrive at is employers are looking to hire fewer workers than they did last year.
Hiring Data Predicts ETF Prices
Using the same company-level hiring data, we weighted it according to the corresponding ETFs. The result was that the hiring data strongly correlates to ETF prices, usually with at least a one-month lead.
In looking at the data, a few points to keep in mind:
- This is reality: Unlike BLS modeled data, this data reflects actual hiring by top US companies.
- Growth continues but is markedly slowing: Most companies are at or below 0% y/y hiring growth. That is, while hiring continues at a strong pace, it is falling below last year’s levels.
Also, here are a few important terms to understand:
- Expanding: The sector hired more employees than the same month last year.
- Contracting: The sector hired fewer employees than the same month last year.
Data by Sector
In this section I’ll provide the hiring data broken out by sector, along with a corresponding list of stocks from that sector.
Homebuilders: BECN, DHI, ETH, FBHS, HD, HOV, LEG, LEN, LII, LOW, LPX, MAS, MHK, NVR, OC, PHM, SHW, TOL, WSO
Consumer Cyclicals: AAL, AMZN, CAH, COST, CVS, DAL, DG, DIS, FOXA, HD, KR, LB, LOW, LUV, M, MCK, NFLX, PCLN, ROST, TGT, TJX, TWC, TWX, UAL, WMT, YUM
Semiconductors: ADI, ALTR, AMAT, ASML, AVGO, BRCM, FSL, INTC, KLAC, LLTC, LRCX, MCHP, MRVL, MU, MXIM, NVDA, QCOM, SNDK, SWKS, TXN, XLNX
Consumer Non-Cyclicals: ADM, CL, DLPH, EL, F, GIS, GM, JCI, K, KMB, KO, MJN, MO, NKE, PEP, PG, RAI, TSLA, VFC
Healthcare: ACT, AET, ALXN, AMGN, BAX, BIIB, BMRN, BMY, BSX, CELG, ESRX, GILD, HCA, HUM, ILMN, JNJ, LLY, MDT, MRK, MYL, PFE, PRGO, REGN, STJ, SYK, TMO, UNH, VRTX
Medical Devices: BAX, BCR, BDX, BIO, BRKR, BSX, EW, HOLX, HRC, IDXX, ISRG, MDT, RMD, STJ, SYK, TFX, TMO, VAR, WAT
Pharma: CT, BMY, HSP, JAZZ, JNJ, LLY, MRK, MYL, PFE, PRGO, ZTS
Healthcare Providers: AET, BKD, CI, CNC, CYH, DGX, DVA, ESRX, HCA, HNT, HUM, LH, LPNT, MD, THC, UHS, UNH, WCG
Transportation: ALK, CAR, CHRW, CNW, CSX, DAL, FDX, JBHT, JBLU, KSU, LSTR, LUV, NSC, R, UAL, UNP, UPS
Aerospace: AIR, BA, BEAV, COL, ESL, GD, HII, LLL, LMT, NOC, PCP, RTN, SPR, TGI, TXT, UTX
Basic Materials: AA, ALB, APD, ARG, ASH, CE, CF, CYT, DD, DOW, ECL, FMC, GRA, HUN, IP, LYB, MON, MOS, NUE, PX, RPM, X
Technology: AAPL, ADBE, AMAT, AVGO, BRCM, CSCO, CTSH, EBAY, EMC, FB, GLW, GOOG, HPQ, INTC, INTU, MSFT, MU, ORCL, QCOM, TXN, WDC, YHOO
Telecom: CTL, FTR, LVLT, S, T, TDS, TMUS, VZ, WIN
Industrials: ACN, ADP, BA, CAT, CMI, CSX, DE, DHR, EMR, ETN, FDX, GD, GE, HON, ITW, LMT, MMM, NOC, NSC, PCP, RTN, TEL, UNP, UPS, UTX
How to Play It
Suppose your employer stopped hiring, or worse, announced layoffs. Would you take that as a sign to buy stock in your company? Of course not; it’s a classic sign of trouble ahead.
Well, that’s exactly what’s happening to most companies in most sectors. In the short term there will always be outliers or companies that are bouncing back from being oversold.
Investing in ETFs is a way to avoid getting caught out by those outliers, and Moneyball’s hiring data tracks ETF prices very nicely. Here’s just one example.
This type of actionable data and insight will be available starting next month when we launch our sister site, TheMoneyballTrader.com.