EconomyxAI · Sector Watch April 2008Released April 16, 2008 |
| |
Conditions index −0.15 avg of 11 sectors, −2 to +2 |
| Outlook index −0.22 sectors with an outlook |
| Districts growing 0/12 per National Summary |
| Positive momentum 4/11 sectors improving |
|
|
This release in brief The read | ■ | Released April 16, 2008, with information collected before April 7, 2008. | | ■ | Conditions weakened since the last report; nine districts noted slowing and only Boston, Cleveland and Richmond described activity as mixed or steady. | | ■ | Consumer spending softened across most of the country with auto sales flat or falling and San Francisco used-car demand 'collapsing,' while tourism stayed strong on foreign visitors. | | ■ | Manufacturing was mixed with aerospace, defense, steel, food and exports strong but housing-related goods and high-tech weak; housing stayed anemic and commercial real estate slowed. | | ■ | Banks tightened standards and saw deteriorating asset quality, with New York delinquency increases the most widespread in 13 years; input costs rose faster than selling prices and labor markets weakened. |
|
Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Turning up | +0.70 |
| Health Care
XLV
▶ Steady | +0.24 |
| Consumer Staples
XLP
▶ Steady | +0.09 |
|
|
| Weakest prospects Financials
XLF
▶ Steady | −0.72 |
| Consumer Discretionary
XLY
▼ Weakening | −0.54 |
| Real Estate
XLRE
▶ Steady | −0.46 |
|
|
|
|
All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
|---|
| 1 | Energy
XLE | | +0.70 | Favorable | +1.09 | +0.50 | ▲ +0.41 | | 2 | Health Care
XLV | | +0.24 | Leaning Favorable | +0.53 | n/a | ▶ +0.02 | | 3 | Consumer Staples
XLP | | +0.09 | Neutral | +0.27 | n/a | ▶ +0.17 | | 4 | Materials
XLB | | +0.03 | Neutral | −0.09 | n/a | ▶ −0.04 | | 5 | Utilities
XLU | | −0.03 | Neutral | +0.00 | n/a | ▶ +0.00 | | 6 | Communication Services
XLC | | −0.03 | Neutral | +0.03 | n/a | ▶ +0.01 | | 7 | Industrials
XLI | | −0.36 | Leaning Unfavorable | −0.19 | +0.00 | ▶ −0.25 | | 8 | Information Technology
XLK | | −0.44 | Leaning Unfavorable | −0.16 | −1.00 | ▼ −0.56 | | 9 | Real Estate
XLRE | | −0.46 | Leaning Unfavorable | −1.06 | −0.18 | ▶ −0.21 | | 10 | Consumer Discretionary
XLY | | −0.54 | Unfavorable | −1.04 | −0.30 | ▼ −0.43 | | 11 | Financials
XLF | | −0.72 | Unfavorable | −1.01 | −0.31 | ▶ −0.35 |
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 | | −0.75 |
Nine districts slowing; Boston, Cleveland and Richmond mixed or steady; San Francisco flat. | Labor markets mostly weakening; layoffs, reduced hours and hiring freezes in Philadelphia, Atlanta and Minneapolis; skilled shortages persist. | | Inflation Pressure (higher = headwind) | | −1.25 |
Input cost increases reported across all districts for food, fuel, chemicals, metals and plastics; manufacturers raising prices; margins squeezed. | Credit quality deteriorated; widespread tightening especially on real estate; consumer demand weakened; New York delinquencies most widespread in 13 years. | Manufacturing outlook subdued by uncertainty; retailers revised forecasts down; Philadelphia manufacturers turned slightly positive. |
|
Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
|---|
| Information TechnologyXLK | · | · | · | · | · | · | +1 | · | · | · | −2 | · | | Health CareXLV | +1 | · | · | +1 | · | +1 | +1 | · | · | · | · | +1 | | FinancialsXLF | −1 | −2 | · | · | · | −1 | · | · | −1 | −1 | −1 | −1 | | Consumer DiscretionaryXLY | · | · | −1 | −1 | −1 | −1 | −1 | −1 | · | · | −1 | −2 | | Communication ServicesXLC | · | · | · | · | +1 | · | · | · | −1 | · | · | · | | IndustrialsXLI | +1 | −1 | −1 | · | +1 | · | · | · | · | −1 | −1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | −1 | · | +1 | +1 | | EnergyXLE | · | · | · | +1 | · | · | · | · | +1 | +1 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | −2 | −1 | · | −1 | −1 | −1 | −1 | −1 | · | −1 | −1 | | MaterialsXLB | · | · | +1 | +1 | · | · | +1 | · | +1 | · | −1 | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
|
Top highlights What moved the scores Real Estate −2 New York Manhattan co-op and condo sales down 30-40 percent; NJ prices down 20 percent. Why it matters: Large-weight district deepens Real Estate. | Financials −2 New York Delinquency increases most widespread in at least 13 years. Why it matters: New York weight drives Financials lower. | Information Technology −2 Dallas High-tech equipment sales down significantly; excess inventory. Why it matters: Pulls IT down. | Energy +2 Dallas Highest number of rigs working in the current expansion. Why it matters: Energy leads. | Consumer Discretionary −2 San Francisco Used vehicle demand 'collapse'; new auto sales very slow. Why it matters: Largest Discretionary weight negative. | Consumer Discretionary −1 Seven districts Retail sales sluggish or declining; autos weak. Why it matters: Discretionary negative. |
|
Twelve Fed districts District roundup Boston Flat Outlook ▼ Mixed; contacts concerned about near-term outlook; tourism robust. |
| New York Contracting −1.0 Further signs of weakening; delinquencies most widespread in 13 years. |
| Philadelphia Contracting −1.0 Outlook ▼ Softened further; manufacturers' outlook turned positive. |
| Cleveland Flat Activity held steady; steel shipments rising. |
| Richmond Flat Advanced at a sluggish pace with a few signs of improvement. |
| Atlanta Contracting −1.0 Activity weakened in March and early April. |
| Chicago Flat Expanded at an even more sluggish pace. |
| St. Louis Flat Slowed slightly; services softening. |
| Minneapolis Flat Slowed slightly; mining increased. |
| Kansas City Flat Continued to slow; gains limited to energy and agriculture. |
| Dallas Flat Expansion softened further; Texas outperforming the nation. |
| San Francisco Flat Largely flat on net. |
|
|
Where the signal is thin or split Divergences to watch | Financials — New York -2 reflects the most widespread delinquency increases in 13 years.
|
| | ENERGY vs CONSUMER: $100+ oil lifts Energy margins while squeezing consumers and truckers.
|
|
|
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 |