EconomyxAI · Beige Book Sector Monitor April 1997Released May 7, 1997 · Data through April 28 |
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Conditions index +0.48 avg of 11 sectors, −2 to +2 |
| Outlook index +0.60 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 8/11 sectors improving |
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This release in brief The read | ■ | District economies continued to expand at a moderate rate, with Richmond accelerating and New York slowing from a brisk pace. | | ■ | Retail sales were moderately above a year ago in most districts, strong in Boston and Richmond and considerably slower in New York; vehicle sales tapered off from very high March levels. | | ■ | Manufacturing ran at very high levels and new orders rose significantly in several districts, led by aerospace, capital equipment and steel; only New York and Dallas reported weakness. | | ■ | Commercial real estate was very strong, with falling vacancies and rising rents; business lending picked up with eased standards, while consumer lending was flat to down and interest rates rose. | | ■ | Labor markets stayed tight but wage pressure was subdued, retail prices were flat almost everywhere, and energy activity stayed strong even as oil and gas prices kept falling. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Consumer Discretionary
XLY
▶ Steady | +0.58 |
| Real Estate
XLRE
▶ Steady | +0.51 |
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| Weakest prospects Communication Services
XLC
▼ Turning down | −0.10 |
| Utilities
XLU
▶ Steady | −0.01 |
| Consumer Staples
XLP
▶ Steady | +0.10 |
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All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
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| 1 | Energy
XLE | | +0.68 | Favorable | +1.00 | +1.00 | ▶ +0.01 | | 2 | Consumer Discretionary
XLY | | +0.58 | Favorable | +0.70 | +0.93 | ▶ −0.10 | | 3 | Real Estate
XLRE | | +0.51 | Favorable | +0.89 | +0.46 | ▶ +0.05 | | 4 | Industrials
XLI | | +0.47 | Leaning Favorable | +0.69 | +0.85 | ▶ +0.02 | | 5 | Financials
XLF | | +0.31 | Leaning Favorable | +0.53 | +0.50 | ▲ +0.47 | | 6 | Information Technology
XLK | | +0.24 | Leaning Favorable | +0.69 | n/a | ▶ +0.02 | | 7 | Materials
XLB | | +0.21 | Leaning Favorable | +0.39 | −0.12 | ▶ +0.01 | | 8 | Health Care
XLV | | +0.12 | Neutral | +0.15 | n/a | ▶ +0.12 | | 9 | Consumer Staples
XLP | | +0.10 | Neutral | +0.22 | n/a | ▶ +0.03 | | 10 | Utilities
XLU | | −0.01 | Neutral | +0.00 | n/a | ▶ +0.00 | | 11 | Communication Services
XLC | | −0.10 | Neutral | +0.00 | n/a | ▼ −0.40 |
Prospect Score blends current conditions, district outlooks, momentum, a sector-specific macro tilt and margins. Now = weighted current conditions; Outlook = n/a when too few districts gave one; Mom. = change vs the average of the two prior releases. |
National Summary, scored −2 to +2 Macro backdrop | Overall Economic Activity | | +1.00 |
Economies generally continued to expand at a moderate rate; Richmond grew faster with balanced gains, San Francisco reported strong growth and Chicago regained momentum, while New York slowed from a brisk pace and Philadelphia was mixed. | Tight labor markets and shortages persisted, with further tightening in New York and Chicago and Chicago manufacturing employment turning up; wage pressure stayed generally subdued outside skilled shortages. | | Inflation Pressure (higher = headwind) | | +0.25 |
Retail prices were flat virtually everywhere and energy prices kept falling; raw materials were mixed, with sharp construction materials increases in Richmond and Boston retailers able to raise prices. | Interest rates moved up: every Kansas City respondent bank raised its prime rate, New York loan rates rose in all categories, and mortgage lending fell in Cleveland, Richmond and St. Louis; business lending was strong with eased standards. | Boston, Cleveland, Philadelphia and Richmond contacts expect continued growth and San Francisco expects a more moderate but still solid national economy; a few contacts worried about higher rates. |
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Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
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| Information TechnologyXLK | +1 | · | +1 | · | · | · | · | · | +1 | · | +1 | +1 | | Health CareXLV | +1 | · | · | · | +1 | · | · | · | · | · | · | · | | FinancialsXLF | +1 | +1 | · | · | −1 | · | +1 | −1 | · | · | · | +1 | | Consumer DiscretionaryXLY | +2 | −1 | · | +1 | +2 | +1 | +1 | · | +1 | +1 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | −1 | +1 | +1 | +2 | · | +1 | +1 | +1 | · | −1 | +2 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | +1 | | EnergyXLE | · | · | · | · | · | · | · | · | · | +1 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | · | +1 | +1 | +1 | +1 | · | +1 | · | +1 | +1 | | MaterialsXLB | · | · | · | +1 | · | · | +1 | · | · | · | · | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy +2, outlook +1 Dallas Gulf drilling capacity essentially at 100 percent; demand for 10 to 20 more rigs. Why it matters: Dallas carries 45% of Energy weight, so this read dominates the sector. | Industrials +2 San Francisco Booming aerospace industry; Southern California winning Boeing subcontracts. Why it matters: San Francisco is 17% of Industrials and one of two +2s. | Industrials +2 Richmond Shipments rose at the fastest monthly rate in several years; orders surged. Why it matters: A sharp swing from -1 in March; adds momentum to Industrials. | Consumer Discretionary −1 New York Sales generally below plan in March and April; slowed noticeably mid-April. Why it matters: New York is 10% of Discretionary weight and the only negative read. | Consumer Discretionary +2 Boston, Richmond Building materials sales up 30 to 40 percent; Richmond sales 'jumped sharply'. Why it matters: Strong reads, but low district weights limit their effect on the weighted score. | Industrials outlook +1 Boston, Philadelphia, Cleveland, Minneapolis, San Francisco Nearly half of Philadelphia firms forecast increased shipments and orders. Why it matters: Forward-looking: broad positive manufacturing outlooks. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Solid growth continues; retailers raising prices. |
| New York Flat Growth slowed from a brisk pace; retail below plan. |
| Philadelphia Flat Outlook ▲ Mixed; manufacturing edged up, retail slipped. |
| Cleveland Growing +1.0 Outlook ▲ Strong overall; optimism high, construction up. |
| Richmond Growing +1.0 Outlook ▲ Expanded faster, balanced across sectors. |
| Atlanta Growing +1.0 Outlook ▲ Expanding moderately; tourism outlook positive. |
| Chicago Growing +1.0 Moderate growth, regaining lost momentum. |
| St. Louis Growing +1.0 Outlook ▶ Moderate pace; some slowing at some firms. |
| Minneapolis Growing +1.0 Outlook ▲ Moderate growth despite blizzard and floods. |
| Kansas City Growing +1.0 Outlook ▲ Continued to grow moderately. |
| Dallas Growing +1.0 Outlook ▲ Expanding at a moderate pace. |
| San Francisco Growing +2.0 Outlook ▲ Continued strong growth in most states. |
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Where the signal is thin or split Divergences to watch | Industrials — San Francisco and Richmond +2 outweigh New York and Dallas -1; Dallas (12%) and New York (7%) dampen the weighted score somewhat.
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| | Consumer Discretionary — Boston and Richmond +2 are low-weight districts (4% and 6%), so the weighted score sits below the unweighted average; New York's -1 carries 10%.
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| | Financials — New York +1 at 28% weight lifts the weighted score above the unweighted average.
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| | COMMUNICATION SERVICES and UTILITIES: no directional coverage; both read neutral.
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| | Energy — Dallas +2 at 45% weight dominates; oil prices fell, but margins improved.
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How to read this. Each Fed district’s report is scored −2 (strong contraction) to +2 (strong expansion) for each GICS sector, then weighted by the district’s share of that sector’s activity. The Prospect Score blends current conditions (25%), district outlooks (35%), momentum (20%), a sector-specific macro tilt (10%) and margin pressure (10%). The Beige Book describes regional activity, not earnings or valuations. Weights and sensitivities are illustrative. This newsletter is for information only and is not investment advice. Source: Federal Reserve Beige Book · Scored by EconomyxAI |