Health Care – XLV – Jobs. Trends. Insight.

Finance, Health Care, IT Stocks Lose Momentum as Hiring Slows

By Charles Thibault on February 2, 2010 in Business/Finance, Computer/Math/IT, Finance - XLF, Health Care, Health Care - XLV, Information Technology - XLK, S&P 500 - SPY.

Several stock market industry segments have taken hits over the past two or three weeks as the labor market situation deteriorated slightly during the second half of January.

Health Care stocks are down 2.9% over the last two weeks (XLV); Information Technologies stocks are down 9.5% over the last three weeks (XLK); and Finance stocks are down 7% over the last three weeks (XLF). The 4-week moving average of new unemployment insurance claims has gone up two weeks in a row.

Hiring in these three sectors – Finance, Health Care, and Information Technologies – has slowed in the past two weeks too, falling off the positive trend they started in September. What's worse, year-over-year hiring improvements have swung from positive to negative in these sectors.

The following analysis confirms a great Q4 in terms of GDP growth (+5.7% annualized), but also suggests that growth rates are slowing.

Let's first take a second to make sure we're not presenting conflicting information about the labor market situation, particularly compared to the Conference Board's Help Wanted Online series which uses the "same" data as we present here (HWOL). That series uses a "mid-month to mid-month" time-frame in order to match the BLS's sampling framework which measures national employment on the 14th day of each month. In early January, we did see some positive labor market signals. However, national Hiring Demand fell by 3.7% two weeks ago (after the HWOL sampling period closed). Since January 19th, the S&P 500 index has lost 4.3% too. This is after the S&P 500 gained 3.6% during the first couple of weeks of January on positive December UI claims data.

The following table compares year-over-year changes in sector Hiring Demand (the number of new online job ads) and weekly returns of sector Exchange Traded Fund (ETF). Sector ETFs are tradable securities which mimic the composition and returns of the different sector indices developed by Standard & Poor's. Sector indices are sub-components of the S&P 500.

Source: WANTED Analytics, Google Finance

S&P 500 Healthcare Jobs Growing 0.8%

By Charles Thibault on November 24, 2009 in Health Care - XLV.

Hiring Demand in the S&P 500 Healthcare sector has been growing at 0.8% a month on average since the bull market started in March. This is twice as fast as National Hiring Demand growth for "Healthcare Practitioners and Technical Occupations", the largest occupational group of healthcare workers tracked by the Bureau of Labor Statistics.

The XLV 'exchange traded fund' (ETF) which mimics the performance of the S&P500 Healthcare Sector Index has grown at an impressive 2.8% a month since March as well.

Sector	OCT 2005 to DEC 2007 26 months	JAN 2008 to FEB 2009	MARCH 2009 to NOV 2009
Occupation 290000 Healthcare Practitioners and Technical	2.4%	-2.1%	0.4%
Occupation 310000 Healthcare Support	2.1%	-1.4%	2.1%
S&P 500 Healthcare Companies Hiring Demand Indicators	2.4%	-1.9%	0.8%
S&P 500 Healtchcare Exchange Traded Fund XLV	0.6%	-2.1%	2.8%

It seems, however, that the XLV ETF is only "catching up" to where it should have been. The healthcare sector is one of the only sectors to have resisted the recession, and the performance of publicly traded healthcare companies should not have been so heavily discounted.

Source: WANTED Analytics

The correlation coefficient between the two has been 0.63 over the past 4 years, indicating a structural relationship between the level of XLV Hiring Demand (number of new online job ads posted by the companies comprising the XLV index) and XLV ETF returns. In fact, a regression equation indicates that for every 1% increase in XLV Hiring Demand, the XLV ETF grows by 1% as well.

WANTED: Analytics

S&P 500 Healthcare (XLV) – Inflection Point too Soon?

By Charles Thibault on July 6, 2009 in Health Care - XLV.

Since reporting an uptick in Hiring Demand by the Health Care sector of the S&P 500, year-over-year returns in the S&P 500 Health Care Index (NYSE:XLV) have improved in relative terms, even as Hiring Demand continues its overall downward trend.

On June 19th, 2009, the yearly return on the health care sector Index was -16.7%. This week (June 30), the Index is down only 13.6% compared to the same date last year, the best performance since October 11, 2008. Since March 5th, the S&P 500 Health Care Index is up 22%.

Source: WANTED Analytics

Hiring Demand has slipped after the spike experienced in mid-May. Year-over-year changes in Hiring Demand (based on the 4-week rolling summation of Unique New Ads) reached a peak of -19.7% on May 15, 2009. However, it slipped back down to -50.0% two weeks ago, and -45.4% last week. Despite improvement in the Index, overall Hiring Demand is still trending downward.

Upturn in Hiring Demand for S&P 500 Health Care Index Companies (Updated)

By Juli Morris and Charles Thibault on May 15, 2009 in Health Care - XLV.

Click chart to view full size

In the chart to the left, Hiring Demand(the blue line in the chart) for companies comprising the The S&P 500 Health Care Index has moved upward recently, according to the latest WANTED Hiring Demand data.

For the week ended May 2, year-over-year change in Hiring Demand based on online job ads improved from -39 percent the prior week to -29 percent (based on the count of Available Ads). For the same period, yearly returns for the Index were up two percentage points, year-over-year, from the prior week, ending at -26 percent. Read more »