EconomyxAI · Beige Book Sector Monitor April 1998Released May 6, 1998 · Data through April 27 |
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Conditions index +0.42 avg of 11 sectors, −2 to +2 |
| Outlook index +0.17 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Growth was moderate to strong, with Dallas slowing slightly and rural Minneapolis weakening. | | ■ | Consumer spending was robust everywhere, helped by a late Easter and home-related purchases, while car sales slipped in most districts. | | ■ | Manufacturing expanded, led by Chicago's steel and construction-related producers, but electronics, chemicals and machinery weakened on falling Asian exports. | | ■ | Every reporting district described improving commercial real estate, with New York rents rising at a 19% annual rate, and housing demand rose in seven of eight districts. | | ■ | Labor markets stayed tight with wage pressure spreading in services and tech jobs, while goods prices held nearly steady; oil drilling and mining eased on low prices. |
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Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▶ Steady | +0.69 |
| Consumer Discretionary
XLY
▲ Improving | +0.66 |
| Industrials
XLI
▶ Steady | +0.47 |
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| Weakest prospects Energy
XLE
▼ Weakening | −0.42 |
| Information Technology
XLK
▶ Steady | −0.21 |
| Health Care
XLV
▶ Steady | −0.08 |
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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 | Real Estate
XLRE | | +0.69 | Favorable | +1.42 | +0.40 | ▶ +0.24 | | 2 | Consumer Discretionary
XLY | | +0.66 | Favorable | +0.98 | +0.73 | ▲ +0.39 | | 3 | Industrials
XLI | | +0.47 | Leaning Favorable | +0.92 | +0.54 | ▶ +0.18 | | 4 | Materials
XLB | | +0.32 | Leaning Favorable | +0.42 | +0.38 | ▶ +0.40 | | 5 | Financials
XLF | | +0.25 | Leaning Favorable | +0.72 | +0.00 | ▶ +0.13 | | 6 | Communication Services
XLC | | +0.25 | Leaning Favorable | +0.40 | n/a | ▶ −0.01 | | 7 | Utilities
XLU | | +0.04 | Neutral | +0.00 | n/a | ▶ +0.04 | | 8 | Consumer Staples
XLP | | −0.01 | Neutral | +0.00 | n/a | ▶ −0.03 | | 9 | Health Care
XLV | | −0.08 | Neutral | +0.00 | n/a | ▶ −0.08 | | 10 | Information Technology
XLK | | −0.21 | Leaning Unfavorable | −0.04 | −0.50 | ▶ −0.10 | | 11 | Energy
XLE | | −0.42 | Leaning Unfavorable | −0.16 | −0.38 | ▼ −0.93 |
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 | | +1.25 |
Growth was moderate to strong in nearly all districts; San Francisco grew at a strong pace, while Dallas slowed slightly and rural parts of Minneapolis weakened. | All seven districts that assessed labor markets called them tight; wage increases became more frequent in services and reached 8-10% for computer professionals and 5-20% at Cleveland temp firms. | | Inflation Pressure (higher = headwind) | | +0.25 |
Goods prices were nearly steady as import competition held them down, but construction materials (especially lumber) and business service fees rose (Dallas, San Francisco). | Business lending rose in six districts and mortgage originations rose everywhere they were reported, but consumer lending slipped and Cleveland lending was flat. | Most contacts stayed optimistic (Boston, Cleveland, Atlanta factories), but Dallas contacts grew more cautious, San Francisco expects slower growth, and pessimism prevails in Minneapolis farm areas. |
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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 | · | · | · | · | · | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | +1 | · | · | +1 | +1 | +1 | +1 | · | +1 | · | +1 | | Consumer DiscretionaryXLY | +2 | +1 | · | +2 | +1 | +1 | +1 | · | · | +1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | +1 | +1 | +1 | +1 | · | +2 | +1 | +1 | +1 | · | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | −1 | −1 | · | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +2 | +2 | · | +1 | +2 | +1 | +2 | +2 | +1 | +1 | +2 | +1 | | MaterialsXLB | · | · | +1 | +1 | · | · | +2 | −1 | −1 | · | · | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy 0 Dallas Softer drilling market and strong shift away from oil-directed drilling. Why it matters: Dallas (45% of Energy) falling to 0 removes the sector's main support. | Real Estate +2 New York, Boston Midtown asking rents rising at a 19% annual rate; markets 'tight as a drum'. Why it matters: New York and Boston +2 lead six +2 reads in the strongest sector. | Industrials +2 Chicago Manufacturing 'very robust'; production high in virtually all segments. Why it matters: Chicago's +2 keeps Industrials firm as Atlanta and Dallas slip to 0. | Materials +2 Chicago Demand for steel 'nothing short of phenomenal'. Why it matters: Offsets St. Louis and Minneapolis -1s in Materials. | Information Technology −1 Chicago High-tech electronics orders weak 'across the board'; prices 'dropping like a stone'. Why it matters: The only directional IT read besides zeros, pulling IT negative. | Consumer Discretionary +2 Boston, Cleveland Sales 'much better than expected'; retail growing 5-10%. Why it matters: Two +2s lift Discretionary despite weaker car sales. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Economy remains strong, except Asia-related business. |
| New York Growing +1.0 Maintained sturdy growth. |
| Philadelphia Growing +1.0 Business conditions mainly positive. |
| Cleveland Growing +1.0 Outlook ▲ Conditions continue to be strong. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Atlanta Growing +1.0 Outlook ▲ Continues to expand at a moderate pace. |
| Chicago Growing +1.0 Outlook ▲ Continued to expand moderately, few signs of slowing. |
| St. Louis Growing +1.0 Economy continues to operate at a high level. |
| Minneapolis Growing +1.0 Outlook ▶ Little change; rural weakness casting a pall. |
| Kansas City Growing +1.0 Outlook ▲ Continued to grow moderately. |
| Dallas Growing +1.0 Outlook ▲ Grew at a slightly slower pace. |
| San Francisco Growing +2.0 Outlook ▲ Grew at a strong pace. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco (47%) at 0 and only Chicago negative, so weighted IT sits just below zero while price commentary is sharply negative.
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| | Real Estate — six +2 reads; Philadelphia gave no real estate section and is scored 0.
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| | Materials — Chicago +2 against St. Louis and Minneapolis -1 leaves a modest positive; construction materials strong, chemicals and mining weak.
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| | Energy — Dallas (45%) at 0 plus two -1s turn weighted Energy slightly negative for the first time since early 1997.
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| | Communication Services, Utilities, Consumer Staples, Health Care — thin or no coverage.
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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 |