EconomyxAI · Sector Watch April 2018Released April 18, 2018 |
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Conditions index +0.40 avg of 11 sectors, −2 to +2 |
| Outlook index +0.32 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Released April 18, 2018, with information collected on or before April 9, 2018. | | ■ | Activity expanded at a modest to moderate pace across all twelve districts; outlooks positive but tariff concerns emerged in manufacturing, agriculture and transportation. | | ■ | Consumer spending rose in most regions on nonauto retail and tourism; manufacturing grew moderately; transportation expanded in over half the districts. | | ■ | Residential activity expanded but low inventories constrained sales; loan demand increased; energy picked up; steel prices rose sharply on the new tariff. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Turning up | +0.58 |
| Financials
XLF
▲ Turning up | +0.58 |
| Information Technology
XLK
▶ Steady | +0.42 |
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| Weakest prospects Utilities
XLU
▶ Steady | −0.10 |
| Consumer Staples
XLP
▶ Steady | −0.01 |
| Communication Services
XLC
▶ Steady | +0.01 |
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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 | | +0.58 | Favorable | +1.06 | +0.72 | ▲ +0.18 | | 2 | Financials
XLF | | +0.58 | Favorable | +0.73 | +0.55 | ▲ +0.64 | | 3 | Information Technology
XLK | | +0.42 | Leaning Favorable | +0.66 | +0.50 | ▶ +0.12 | | 4 | Materials
XLB | | +0.35 | Leaning Favorable | +0.28 | +0.50 | ▶ −0.12 | | 5 | Real Estate
XLRE | | +0.33 | Leaning Favorable | +0.72 | +0.41 | ▶ −0.23 | | 6 | Industrials
XLI | | +0.29 | Leaning Favorable | +0.88 | +0.41 | ▶ −0.21 | | 7 | Consumer Discretionary
XLY | | +0.11 | Neutral | +0.20 | +0.47 | ▶ −0.36 | | 8 | Health Care
XLV | | +0.04 | Neutral | +0.07 | +0.00 | ▶ +0.07 | | 9 | Communication Services
XLC | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 10 | Consumer Staples
XLP | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Utilities
XLU | | −0.10 | Neutral | −0.21 | +0.00 | ▶ −0.21 |
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 | | +0.50 |
Modest to moderate expansion across all twelve districts. | Widespread modest to moderate job growth; tight labor; wage growth modest. | | Inflation Pressure (higher = headwind) | | +0.75 |
Moderate price growth; steel prices up sharply on tariffs; building materials brisk. | Loan demand increased; St. Louis and Dallas C&I growth robust. | Outlooks positive but concern about newly imposed and proposed tariffs. |
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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 | | Health CareXLV | · | · | · | · | +1 | · | · | · | · | · | · | · | | FinancialsXLF | · | +1 | +1 | · | · | +1 | +1 | +2 | · | +1 | +2 | · | | Consumer DiscretionaryXLY | +1 | +1 | · | +1 | −1 | · | +1 | +1 | +1 | +1 | +1 | −1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | +1 | +1 | +1 | · | +1 | +1 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | −1 | | Real EstateXLRE | · | −1 | −1 | · | +1 | +1 | · | · | +1 | +1 | +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 Robust expansion in the energy industry continued. Why it matters: Dallas carries the largest Energy weight. | Financials +2 Dallas Markedly stronger growth in C&I and CRE loans. Why it matters: Strong Financials read. | Financials +2 St. Louis C&I loan volumes grew 17 percent from a year ago. Why it matters: Strong Financials read. | Real Estate +2 San Francisco Real estate activity continued at a strong pace. Why it matters: SF carries large Real Estate weight. | Industrials +1 broad−based Broad-based Manufacturing grew moderately; transport expanded. Why it matters: Industrials positive in ten districts. | Information Technology +1 San Francisco, Dallas, Boston High-tech output accelerated; software revenues up. Why it matters: SF carries 47% of IT weight. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| New York Growing +0.5 Outlook ▲ Continued to grow modestly. |
| Philadelphia Growing +0.5 Outlook ▲ Continued at a modest pace. |
| Cleveland Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Richmond Growing +1.0 Outlook ▲ Grew moderately. |
| Atlanta Growing +0.5 Outlook ▲ Improved modestly. |
| Chicago Growing +1.0 Outlook ▲ Continued at a moderate pace. |
| St. Louis Growing +0.5 Outlook ▲ Improved at a modest pace. |
| Minneapolis Growing +1.0 Outlook ▲ Moderate economic growth. |
| Kansas City Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Dallas Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
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Where the signal is thin or split Divergences to watch | Energy — Dallas +2 with its large Energy weight drives the weighted score well above the unweighted average.
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| | Financials — Two +2 reads plus NY +1 lift weighted Financials.
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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 |