EconomyxAI · Sector Watch April 2006Released April 26, 2006 |
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Conditions index +0.47 avg of 11 sectors, −2 to +2 |
| Outlook index +0.27 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | Released April 26, 2006, with information collected before mid-April 2006 (date not printed in the PDF). | | ■ | Activity kept expanding in March and early April in all twelve districts; Minneapolis, Kansas City and San Francisco called growth solid, Richmond quickened and Dallas strengthened, while New York slipped a bit. | | ■ | Non-auto retail sales were up in most districts despite the Easter shift, auto sales were mixed with imports and used cars outselling domestic models, and tourism was mostly positive. | | ■ | Manufacturing orders kept strengthening with steel, machine tools, aircraft and mining equipment strong; housing cooled with rising inventories while commercial real estate firmed everywhere. | | ■ | Labor markets were tight or tightening for skilled workers; energy and metals costs were high, but firms had limited ability to raise selling prices. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Industrials
XLI
▶ Steady | +0.57 |
| Information Technology
XLK
▶ Steady | +0.40 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | +0.00 |
| Communication Services
XLC
▶ Steady | +0.04 |
| Real Estate
XLRE
▶ Steady | +0.04 |
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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 | | +0.83 | Favorable | +1.26 | +1.00 | ▶ +0.00 | | 2 | Industrials
XLI | | +0.57 | Favorable | +1.07 | +0.50 | ▶ +0.08 | | 3 | Information Technology
XLK | | +0.40 | Leaning Favorable | +0.61 | +0.50 | ▶ −0.06 | | 4 | Financials
XLF | | +0.39 | Leaning Favorable | +0.71 | +0.50 | ▶ +0.23 | | 5 | Consumer Discretionary
XLY | | +0.38 | Leaning Favorable | +0.64 | +0.50 | ▶ +0.10 | | 6 | Materials
XLB | | +0.22 | Leaning Favorable | +0.33 | +0.00 | ▶ +0.03 | | 7 | Health Care
XLV | | +0.12 | Neutral | +0.36 | +0.00 | ▶ +0.04 | | 8 | Utilities
XLU | | +0.06 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Real Estate
XLRE | | +0.04 | Neutral | +0.17 | +0.00 | ▶ −0.24 | | 10 | Communication Services
XLC | | +0.04 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Consumer Staples
XLP | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 |
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 |
All districts expanding; five solid, quickening or strengthening; New York slipped slightly. | Labor markets tight or tightening in a majority of districts, especially for skilled positions and truck drivers. | | Inflation Pressure (higher = headwind) | | −0.75 |
High energy costs and rising metals and petroleum-product costs; pass-through mixed and limited. | C&I lending up in nearly all districts; mortgage and consumer demand declining; credit quality positive. | Manufacturers expect business to stay on an upward trajectory; energy costs a risk to summer spending. |
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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 | · | · | · | +1 | · | · | · | · | · | · | +1 | | FinancialsXLF | · | +1 | +1 | +1 | · | +1 | +1 | · | · | · | · | +1 | | Consumer DiscretionaryXLY | +1 | · | +1 | · | −1 | +1 | · | +1 | +1 | +1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | · | +1 | +1 | +2 | · | +1 | +1 | +1 | +1 | +1 | +2 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | · | · | · | · | · | · | · | · | · | +2 | · | | MaterialsXLB | · | · | · | +1 | · | +1 | +1 | · | +1 | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy +2 Dallas Oil services rejecting work; backlogs growing. Why it matters: Largest Energy weight. | Industrials +2 San Francisco Aircraft production rapid; machine tools near full capacity. Why it matters: Large Industrials weight. | Industrials +2 Richmond Shipments and orders rose briskly. Why it matters: Industrials strength. | Real Estate +2 Dallas Record first-quarter home sales. Why it matters: Real Estate strength. | Financials +1 broad−based Broad-based Commercial lending up in six districts. Why it matters: Financials support. | Consumer Discretionary +1 broad−based Broad-based Retail sales up in eight districts. Why it matters: Discretionary support. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Business activity continues to increase. |
| New York Growing +0.5 Outlook ▲ Expanded; growth may have slipped. |
| Philadelphia Growing +0.5 Outlook ▲ Activity increased. |
| Cleveland Growing +0.5 Outlook ▲ Steady gains. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a somewhat quicker pace. |
| Atlanta Growing +0.5 Outlook ▲ Mostly positive. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| St. Louis Growing +0.5 Outlook ▲ Expanded modestly. |
| Minneapolis Growing +1.0 Outlook ▲ Grew at a solid pace. |
| Kansas City Growing +1.0 Outlook ▲ Grew solidly. |
| Dallas Growing +1.0 Outlook ▲ Continued to strengthen. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a solid pace. |
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Where the signal is thin or split Divergences to watch | Industrials — San Francisco's +2 lifts the weighted Industrials score above the simple average.
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| | Real Estate — Dallas's +2 is offset by Boston's -1 and a field of zeros.
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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 |