EconomyxAI · Sector Watch August 1999Released August 11, 1999 · Data through August 3 |
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Conditions index +0.41 avg of 11 sectors, −2 to +2 |
| Outlook index −0.08 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 2/11 sectors improving |
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This release in brief The read | ■ | Economic activity stayed strong, though supply constraints were widespread. | | ■ | Retail sales decelerated somewhat in July after a robust second quarter, partly on low clearance inventories; auto sales stayed high. | | ■ | Manufacturing expanded in most districts, with electronics, heavy trucks and construction materials strong while textiles and metals stayed weak. | | ■ | Housing remained strong but shortages of materials, labor and land constrained building and pushed up costs; commercial markets stayed tight. | | ■ | Commercial and industrial loan demand grew briskly while refinancing fell; energy showed signs of improvement as oil climbed, though drilling stayed below a year ago. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Discretionary
XLY
▼ Turning down | +0.50 |
| Industrials
XLI
▶ Steady | +0.37 |
| Information Technology
XLK
▶ Steady | +0.33 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.08 |
| Utilities
XLU
▶ Steady | −0.01 |
| Health Care
XLV
▶ Steady | +0.09 |
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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 | | +0.50 | Leaning Favorable | +0.87 | +0.68 | ▼ −0.41 | | 2 | Industrials
XLI | | +0.37 | Leaning Favorable | +0.73 | +0.17 | ▶ +0.00 | | 3 | Information Technology
XLK | | +0.33 | Leaning Favorable | +0.66 | n/a | ▶ +0.03 | | 4 | Financials
XLF | | +0.28 | Leaning Favorable | +0.53 | −0.50 | ▲ −0.04 | | 5 | Communication Services
XLC | | +0.24 | Leaning Favorable | +0.40 | n/a | ▶ −0.04 | | 6 | Materials
XLB | | +0.24 | Leaning Favorable | +0.04 | −1.00 | ▶ −0.05 | | 7 | Real Estate
XLRE | | +0.21 | Leaning Favorable | +1.00 | −0.33 | ▼ −0.39 | | 8 | Energy
XLE | | +0.18 | Leaning Favorable | +0.14 | +0.50 | ▶ +0.46 | | 9 | Health Care
XLV | | +0.09 | Neutral | +0.08 | n/a | ▶ −0.10 | | 10 | Utilities
XLU | | −0.01 | Neutral | +0.00 | n/a | ▶ −0.10 | | 11 | Consumer Staples
XLP | | −0.08 | Neutral | +0.04 | n/a | ▶ −0.07 |
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 |
Continued strength with widespread supply constraints; retail decelerated somewhat in July and Atlanta, Chicago and Kansas City manufacturing slowed, while Dallas accelerated slightly. | Widespread labor shortages in virtually every district, but only scattered reports of actual wage acceleration, mainly in construction, retail, biotech and IT. | | Inflation Pressure (higher = headwind) | | +0.50 |
Input price pressures intensified in New York, Philadelphia and Chicago, with construction materials, energy, steel and paper turning up, but no broad-based pickup in consumer prices. | Loan demand steady or rising; C&I growth strong in six districts and Chicago business lending at 'the fastest pace in a decade', while mortgage refinancing fell and New York and Cleveland tightened. | Retailers in five districts optimistic and San Francisco expects regional growth to outpace the nation, but Philadelphia's expectations moderated and Chicago and Kansas City builders lowered expectations. |
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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 | +2 | · | · | +1 | · | +1 | | Consumer DiscretionaryXLY | +1 | · | +2 | +2 | +2 | +1 | +1 | · | +2 | · | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | +1 | +1 | +1 | +1 | −1 | +1 | +1 | +1 | · | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | −1 | · | · | +1 | · | | EnergyXLE | · | · | · | · | · | −1 | · | · | · | · | · | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +2 | +1 | +1 | +1 | · | +1 | +2 | +1 | · | +1 | +1 | | MaterialsXLB | · | · | −1 | · | · | · | · | · | −1 | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Information Technology +1 San Francisco East Asian demand boosted computers and telecom equipment sales. Why it matters: San Francisco is about 47% of IT; a fifth straight +1 keeps IT favorable. | Financials +2 Chicago Business lending 'the fastest pace in a decade'. Why it matters: Chicago is a heavy Financials district; the +2 lifts the weighted score. | Real Estate +2 New York Higher rates 'only intensified the buying frenzy'; Manhattan sales up 40%. Why it matters: New York carries large Real Estate weight. | Consumer Discretionary +2 Cleveland, Richmond, Philadelphia, Minneapolis Auto sales up 10-15%; resort spending at a 10-year high. Why it matters: Four +2s keep Discretionary at the top despite July slowing elsewhere. | Industrials +1 broad−based Ten districts Heavy truck orders at record highs; manufacturing expanding in most districts. Why it matters: Breadth keeps Industrials favorable. | Consumer Discretionary 0 New York, Dallas, Kansas City Sales slowed significantly in July after a hectic May and June. Why it matters: Heavy-weight New York at 0 tempers the Discretionary reading. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Economic activity continues its expansion. |
| New York Growing +1.0 Expanding at a somewhat slower pace. |
| Philadelphia Growing +1.0 Outlook ▲ Advanced moderately; spending robust. |
| Cleveland Growing +1.0 Industrial activity still gaining strength. |
| Richmond Growing +2.0 Advanced at a brisk pace. |
| Atlanta Growing +1.0 Outlook ▲ Moderate growth; outlook positive. |
| Chicago Growing +1.0 Modest expansion, very tight labor. |
| St. Louis Growing +2.0 Continues to grow at a brisk pace. |
| Minneapolis Growing +1.0 The pulse continues strong. |
| Kansas City Growing +1.0 Healthy, but growth continued to slow. |
| Dallas Growing +1.0 Outlook ▶ Activity accelerated slightly. |
| San Francisco Growing +2.0 Outlook ▲ Strong economic conditions. |
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Where the signal is thin or split Divergences to watch | Industrials — ten +1s with only Atlanta negative; broad but no +2 reads.
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| | Financials — Chicago's +2 lifts the sector even as New York stays at 0.
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| | Energy — Dallas holds at 0 and San Francisco turns +1; the sector is now roughly neutral.
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| | Real Estate — fewer +2 reads than June as supply constraints cap sales; outlooks turn slightly negative.
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| | Utilities — no directional coverage this release.
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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 |