First US Payroll Crash Since 2010: What's Hot, What's Not

The U.S. economy saw the loss of 701 thousand jobs in March, much worse than market expectations of a 100K fall, reflecting the impact of the coronavirus outbreak. It marked the first decline in payrolls since September 2010 but “the figures were not as bad as those seen in 2008 as the number excludes the last two weeks of March when unemployment claims surged by nearly 10 million,” as tradingeconomics.com.

About two-thirds of job losses were seen in leisure and hospitality, especially in food services and drinking places. According to a CNBC report, the headline number reflects data from establishments the government has surveyed for its report. However, the household survey, which reflects individuals’ employment situation, disclosed a sharp fall of nearly 3 million.

The unemployment rate surged to 4.4%, marking its biggest one-month jump since 1975. Investors should note that the economy had been chugging along with an unemployment rate of 3.5%, the lowest in more than 50 years, during the pre-virus phase.

Against this backdrop, let’s take a look at the industries which survived the storm and the ones which collapsed.

Winners

Retail — General Merchandise Stores

Employment in retail trade fell by 46,000. Among the whole bunch,general merchandise stores added 10,000 jobs.

The Kroger Co. KR —The Zacks Rank #3 (Hold) company operates in the thin-margin grocery industry. Kroger is well-positioned with pick-up, delivery and ship to home solutions amid the pandemic and the resultant lockdown. Its stock is up 9% so far this year and it has gained about 2.3% in the past month.

Utilities — Water Supply

Employment in utilities gained by about 800 in March from the previous month.

American States Water Company AWR — The Zacks Rank #1 (Strong Buy) company provides fresh water, wastewater services and electricity to customers in the United States. The stock also comes from a favorable Zacks industry (top 40%). The stock is down only 10% in the past month compared with 20.5% decline in the S&P 500.

Transportation and Warehousing — Storage

Employment in transportation and warehousing was not much hurt in March (-5,000). In the segment, warehousing and storage added 8,000 jobs.

Public Storage PSA —The Zacks Rank #3 company is a leading self-storage real estate investment trust in the United States. The company acquires, develops, owns and operates self-storage facilities, generally on a month-to-month basis, for business as well as personal use. The company hails from a favorable Zacks industry (top 40%). The stock has lost 14.2% in the past month.

Losers

Leisure & Hospitality — Food Services and Drinking Places

Employment in leisure and hospitality nosedived by 459,000, “65% of all the positions lost in March.” Most of the decline came from food services and drinking places (down 417,000). Such huge job losses wiped out job growth seen over the previous two years.

McDonald's Corporation MCD — Investors can steer clear of the Zacks Rank #4 (Sell) fast-food restaurant chain. McDonald's announced to shorten its menu and stop serving breakfast all day. MCD has lost 22.6% in the past month.

Leisure & Hospitality — Hotels

Employment in the hotel industry declined by 29,000.

Wyndham Hotels & Resorts Inc. WH — The Zacks Rank #4 provider of hotel and resort chain operates primarily in Canada, Mexico, Colombia, Ecuador, Turkey, Germany, the U.K., the Caribbean and Margarita Island in Venezuela. The stock is off 49.8% in the past month.

Healthcare — Dentists

Health care employment — which was one of the sturdy sectors in the past year — saw severe job losses in March. Job losses in offices of dentists were about 17,000.

Dentsply Sirona Inc. XRAY — The Zacks Rank #3 stock is a global leader in the design, development, manufacture and marketing of dental consumables, dental laboratory products, dental specialty products and consumable medical device products. The stock has slumped 25.9% in the past month.

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DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report
 
Public Storage (PSA) : Free Stock Analysis Report
 
McDonald's Corporation (MCD) : Free Stock Analysis Report
 
The Kroger Co. (KR) : Free Stock Analysis Report
 
American States Water Company (AWR) : Free Stock Analysis Report
 
Wyndham Hotels & Resorts Inc. (WH) : Free Stock Analysis Report
 
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