EconomyxAI · Beige Book Sector Monitor August 2006Released September 6, 2006 |
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Conditions index +0.25 avg of 11 sectors, −2 to +2 |
| Outlook index +0.05 sectors with an outlook |
| Districts growing 9/12 per National Summary |
| Positive momentum 1/11 sectors improving |
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This release in brief The read | ■ | Released September 6, 2006, with information collected before late August 2006 (date not printed in the PDF). | | ■ | Activity continued to expand, but five districts (Boston, New York, Philadelphia, Kansas City and Dallas) reported deceleration; Dallas was still strong and San Francisco solid, while Atlanta was mixed and Richmond slow. | | ■ | Consumer spending rose slowly, weighed down by vehicles and housing-related goods; auto inventories were bloated and tourism was steady at relatively strong levels. | | ■ | Manufacturing expanded in all districts despite pockets of weakness in autos and residential construction; housing weakened throughout the nation while commercial real estate strengthened in most districts. | | ■ | Labor markets were mostly steady with scattered skill shortages; metals, energy and raw material costs kept rising, but little was passed through to finished consumer goods. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Industrials
XLI
▶ Steady | +0.36 |
| Information Technology
XLK
▶ Steady | +0.33 |
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| Weakest prospects Financials
XLF
▼ Turning down | −0.35 |
| Consumer Discretionary
XLY
▶ Steady | −0.35 |
| Real Estate
XLRE
▶ Steady | −0.22 |
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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 | | +0.76 | Favorable | +1.26 | +1.00 | ▶ +0.00 | | 2 | Industrials
XLI | | +0.36 | Leaning Favorable | +0.74 | +0.50 | ▶ −0.12 | | 3 | Information Technology
XLK | | +0.33 | Leaning Favorable | +0.54 | +0.50 | ▶ −0.10 | | 4 | Health Care
XLV | | +0.12 | Neutral | +0.36 | +0.00 | ▶ +0.07 | | 5 | Materials
XLB | | +0.10 | Neutral | +0.26 | +0.00 | ▶ −0.09 | | 6 | Communication Services
XLC | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 7 | Consumer Staples
XLP | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 8 | Utilities
XLU | | −0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Real Estate
XLRE | | −0.22 | Leaning Unfavorable | −0.12 | −0.50 | ▶ −0.02 | | 10 | Consumer Discretionary
XLY | | −0.35 | Leaning Unfavorable | −0.14 | −0.50 | ▶ −0.34 | | 11 | Financials
XLF | | −0.35 | Leaning Unfavorable | −0.12 | −0.50 | ▼ −0.55 |
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 |
All districts expanding but five decelerated; Dallas strong, San Francisco solid, Atlanta mixed, Richmond slow. | Labor markets mostly steady; brisk job growth in Kansas City and acceleration in Richmond; shortages not intensifying except in Dallas. | | Inflation Pressure (higher = headwind) | | −0.50 |
Widespread increases in metals, energy and raw material costs; natural gas and steel moderating; retail prices steady. | Lending slowing, especially mortgages; overall loan demand declined in four districts; standards steady to slightly tighter. | Manufacturers optimistic about the coming months, but housing contacts expect markets to stay weak or weaken further. |
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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 | | Health CareXLV | +1 | · | · | · | +1 | · | · | · | · | · | · | +1 | | FinancialsXLF | · | −1 | · | · | · | · | · | · | · | · | · | +1 | | Consumer DiscretionaryXLY | · | · | −1 | · | −1 | +1 | · | −1 | · | · | −1 | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | · | +1 | · | · | +1 | +1 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | · | · | −1 | −1 | −1 | · | · | · | · | +1 | · | | MaterialsXLB | · | · | · | · | · | +1 | +1 | · | +1 | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Financials −1 New York Securities activity weakened across the board. Why it matters: Largest Financials weight. | Energy +2 Dallas Energy expanding as rapidly as possible. Why it matters: Largest Energy weight. | Industrials +1 broad−based Broad-based Manufacturing expanded in eight districts. Why it matters: Industrials support. | Consumer Discretionary −1 Philadelphia, Richmond, St. Louis, Dallas Retail sluggish; back-to-school disappointing. Why it matters: Discretionary drag. | Real Estate −1 Cleveland, Richmond, Atlanta New home sales weak; inventories rising. Why it matters: Real Estate drag. | Information Technology +1 San Francisco, Boston Semiconductor orders solid; software double-digit growth. Why it matters: IT positive. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Mixed but still largely positive. |
| New York Flat Outlook ▶ Signs of decelerating. |
| Philadelphia Growing +0.5 Outlook ▲ Increased; growth easing. |
| Cleveland Flat Outlook ▶ Modest, mixed growth. |
| Richmond Flat Outlook ▶ Grew at a slow pace. |
| Atlanta Growing +0.5 Outlook ▲ Mixed. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| St. Louis Growing +0.5 Outlook ▲ Expanded modestly. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly. |
| Kansas City Growing +0.5 Outlook ▲ Expanded modestly. |
| Dallas Growing +1.0 Outlook ▲ Grew quite strongly. |
| San Francisco Growing +1.0 Outlook ▲ Solid but reduced pace. |
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Where the signal is thin or split Divergences to watch | Financials — New York's -1 carries the largest weight and pulls the weighted Financials score below zero.
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| | Energy — Dallas's +2 dominates the weighted Energy score.
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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 |