The health care sector continues to be a bulwark of strength, according to the latest employment report for August. It continues to thrive despite a very strong national job market. Health care facilities tacked on 31,000 new jobs last month, a significant gain that highlights health care’s prominence in the current landscape. In the last year, health care jobs have added an average of 42,000 per month. This additional growth bears testimony to the continuing need for services in this crucial industry.
The August job increases were led by ambulatory health care services with the addition of 13,000 jobs. Further, for the same period of February to May, both nursing and residential care facilities and hospitals were posting 9,000 jobs apiece. This ongoing expansion of health care jobs happens while other sectors are experiencing much worse distress.
Though there was volatility in the overall employment figures, one sector—our health care industry—continues to be a beacon of strength. The unemployment rate is low enough to suggest a middling labor market at best. Job data for previous months revealed revisions. June’s numbers were adjusted downward by 27,000, while July’s figures saw an upward revision of 6,000.
Health Care Sector Performance
The health care sector’s jump in August just continues to underscore that sector’s important position in the labor market. With a net addition of 31,000 jobs, it’s still the bright spot in an economy that’s experiencing slower growth everywhere else. The average monthly job gain over the last year is only 42,000. This trend would instead seem to indicate a persistent, powerful demand for health care professionals and support staff.
Ambulatory health care services continued to be at the top of the list for job creation with an increase of 13,000 positions. More than half of this portion of the health care sector is made up of outpatient services. The demand for these services has surged as more patients are looking for non-emergency care out of hospitals. With over 9,000 jobs added between April and May in nursing and residential care facilities, we’re witnessing an unmistakable demand for long-term care services. This trend is doubly pronounced as our population grays.
Moreover, hospitals were responsible for a good share of that job growth themselves, adding on another 9,000 positions on top of that. This gain heralds historic investments in health professional infrastructure and a positive response to patient demand. Overall, the health care sector’s ability to consistently generate employment opportunities may provide a buffer against economic uncertainties affecting other industries.
Market Reactions and ETF Performance
The health care sector is exploding — with an overall demand for 9 million new robustly — health care jobs. In light of this, the Health Care Select Sector SPDR Fund (XLV) recently shot up 6.9% in the last month alone. This ETF serves as a good barometer for investors ready to dip their toes into health care stocks. It’s a further demonstration of the tremendous confidence in the sector’s future prospects.
XLV has far more concentrated exposure to the more politically vulnerable sub-sectors within health care. It has 22.32% of its stock assets in healthcare providers and services. That’s a powerful signal of its commitment to fare on companies that provide critical services in medicine. XLV weighs 17.1% in the biotech sector. This sector is leading the way in creating transformative, targeted drug development approaches and treatment solutions.
Additionally, about 30% of XLV’s holdings are in pharmaceutical companies, which anchors its footing in this essential industry even more. The fund boasts a remarkable 8.7% allocation on life sciences tools and services. On top of that, it gives about 22% exposure to health care equipment and supplies. This multifaceted strategy provides investors the opportunity to benefit from the growing potential across all aspects of the health care continuum.
Broader Employment Landscape
At the same time as the health care sector is doing so well, other parts of the economy are in crisis. Manufacturing employment was unchanged in August and down 78,000 jobs on the year. This significant decline is indicative of challenges that the manufacturing sector is experiencing as manufacturing adapts to changing consumer demand and supply chain disruptions.
This patchy jobs report definitely makes us stop and think about what shape the economy is in. Even with the recent health care job boom, industries like manufacturing still show areas of fragility in today’s economy. Changes to earlier job reports bring some fog to the picture. June’s job number was revised down by 27,000, indicating that previous estimates overstated growth in jobs.
First, health care is booming and growing jobs like gangbusters. At the same time, other key sectors are experiencing deep stress that threatens to undermine long-term economic prosperity.