EconomyxAI · Sector Watch April 1999Released May 5, 1999 · Data through April 26 |
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Conditions index +0.44 avg of 11 sectors, −2 to +2 |
| Outlook index +0.42 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 8/11 sectors improving |
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This release in brief The read | ■ | The economy continued to operate at generally strong levels and expand at a moderate pace. | | ■ | Consumer spending stayed healthy, led by strong motor vehicle sales, and tourism posted strong numbers in most districts. | | ■ | Most districts noted improving manufacturing; Richmond shipments and orders rose sharply and telecom and electronics makers grew, though steel stayed soft on inventory overhangs. | | ■ | Residential and commercial construction stayed at high levels, with drywall, sheetrock and labor shortages pushing building costs up. | | ■ | The energy outlook improved as OPEC cuts lifted oil above $16, but the U.S. rig count fell below 500 for the first time before stabilizing. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Discretionary
XLY
▶ Steady | +0.68 |
| Real Estate
XLRE
▶ Steady | +0.62 |
| Financials
XLF
▲ Improving | +0.47 |
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| Weakest prospects Utilities
XLU
▶ Steady | +0.05 |
| Health Care
XLV
▶ Steady | +0.06 |
| Consumer Staples
XLP
▶ Steady | +0.11 |
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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 | Consumer Discretionary
XLY | | +0.68 | Favorable | +1.15 | +0.89 | ▶ +0.02 | | 2 | Real Estate
XLRE | | +0.62 | Favorable | +1.41 | +0.19 | ▶ +0.21 | | 3 | Financials
XLF | | +0.47 | Leaning Favorable | +0.89 | +0.50 | ▲ +0.39 | | 4 | Industrials
XLI | | +0.38 | Leaning Favorable | +0.83 | −0.04 | ▲ +0.61 | | 5 | Communication Services
XLC | | +0.33 | Leaning Favorable | +0.40 | n/a | ▶ +0.20 | | 6 | Information Technology
XLK | | +0.29 | Leaning Favorable | +0.58 | +0.50 | ▶ −0.04 | | 7 | Energy
XLE | | +0.26 | Leaning Favorable | −0.61 | +0.50 | ▲ +0.79 | | 8 | Materials
XLB | | +0.23 | Leaning Favorable | −0.02 | n/a | ▶ +0.26 | | 9 | Consumer Staples
XLP | | +0.11 | Neutral | +0.09 | n/a | ▶ −0.02 | | 10 | Health Care
XLV | | +0.06 | Neutral | +0.08 | n/a | ▶ −0.21 | | 11 | Utilities
XLU | | +0.05 | Neutral | +0.00 | n/a | ▶ +0.04 |
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 |
The economy operated at generally strong levels and expanded moderately, with Richmond accelerating and Minneapolis 'flourishing'; Atlanta's outlook became less upbeat. | Labor markets remained tight with shortages forcing plants to relocate, but there were no reports of a significant pickup in wages; non-wage compensation and bonuses rose. | | Inflation Pressure (higher = headwind) | | +0.25 |
Most prices stable, but oil, gasoline and building materials (especially sheetrock) rose, and Boston manufacturers saw previously falling input costs stabilize or rise. | Loan demand fairly strong overall, robust in Dallas, Atlanta and Chicago; lending fell only in St. Louis, and credit quality was little changed. | Dallas contacts expressed increased confidence, San Francisco respondents grew more optimistic and retailers in several districts were optimistic, but Atlanta's outlooks became less upbeat. |
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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 | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | +1 | +1 | +1 | · | +1 | +1 | +1 | · | · | +1 | +1 | +1 | | Consumer DiscretionaryXLY | +1 | +1 | +1 | +2 | +2 | +1 | +1 | · | +2 | +2 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | +1 | +1 | +1 | +2 | +1 | +1 | +1 | +1 | · | +1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | +1 | · | | EnergyXLE | · | · | · | · | · | · | · | · | −1 | −1 | −1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +2 | +2 | +1 | +1 | +2 | · | +1 | +1 | +2 | +1 | +1 | +2 | | MaterialsXLB | · | · | · | · | · | · | −1 | · | −1 | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy −1 Dallas Rig count under 500 for the first time ever, but stabilized; drilling could pick up by summer. Why it matters: Dallas carries the largest Energy weight; moving from -2 to -1 lifts the sector substantially. | Industrials +2 Richmond Shipments and new orders rose sharply; exports resurged at the ports. Why it matters: The only +2 in Industrials amid broad +1s. | Real Estate +2 broad−based Boston, New York, Richmond, Minneapolis, San Francisco Real estate has 'never seen a better market'; prices 'going through the roof'. Why it matters: Five +2 reads keep Real Estate the strongest sector. | Information Technology +1 San Francisco Production strongest for telecom equipment; telecom services demand grew further. Why it matters: San Francisco is about 47% of IT; a third straight +1 keeps IT favorable. | Consumer Discretionary +2 Cleveland, Richmond, Minneapolis, Kansas City Retail sales 'outstanding'; auto sales 'feverish' in March. Why it matters: Four +2s lift Discretionary to the top of the conditions ranking. | Financials +1 broad−based New York, San Francisco, Dallas, Chicago Lending growth robust; loan demand grew across all categories. Why it matters: Nine +1s with no negatives make Financials broadly positive. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Activity increased moderately. |
| New York Growing +2.0 Retains significant upward momentum. |
| Philadelphia Growing +1.0 Outlook ▲ Economic activity continued to advance. |
| Cleveland Growing +1.0 Outlook ▲ Continues to perform at a high level. |
| Richmond Growing +2.0 Advanced at a quicker pace. |
| Atlanta Growing +1.0 Outlook ▼ Grows moderately; outlooks less upbeat. |
| Chicago Growing +1.0 Remained strong, similar to last report. |
| St. Louis Growing +1.0 Business conditions remain strong. |
| Minneapolis Growing +2.0 Economy continues to flourish. |
| Kansas City Growing +1.0 Outlook ▲ Expanded modestly. |
| Dallas Growing +1.0 Outlook ▲ Continued to expand with more confidence. |
| San Francisco Growing +2.0 Outlook ▲ Robust economic activity. |
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Where the signal is thin or split Divergences to watch | Industrials — broadest manufacturing improvement yet, with Richmond at +2 and no negatives.
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| | Energy — all three energy districts improve to -1; still the weakest sector, but the gap narrows sharply.
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| | Financials — nine +1s and no negatives.
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| | Materials — Dallas +1 offsets Chicago and Minneapolis -1; weighted Materials turns about neutral.
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| | UTILITIES and HEALTH CARE: thin coverage; COMMUNICATION SERVICES has only San Francisco.
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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 |