EconomyxAI · Beige Book Sector Monitor August 2007Released September 5, 2007 |
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Conditions index +0.11 avg of 11 sectors, −2 to +2 |
| Outlook index +0.00 sectors with an outlook |
| Districts growing 8/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Released September 5, 2007, with information collected before late August 2007 (date not printed in the PDF). | | ■ | Activity continued to expand: St. Louis and Kansas City moderate, Cleveland, Chicago and Minneapolis modest, Boston and Atlanta mixed, and Philadelphia, Richmond, Dallas and San Francisco growing but slower. | | ■ | Most districts said financial-market turmoil had tightened residential mortgage standards, noticeably affecting housing and adding uncertainty; effects outside real estate were limited so far. | | ■ | Retail sales rose modestly to moderately while vehicle and furniture sales were slow; manufacturing expanded in most districts but autos and building materials softened, and housing weakness deepened. | | ■ | Nearly every district reported at least modest employment gains; wage increases were moderate and overall price pressures little changed, though food costs kept rising. |
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Sector prospects Where the 3–12 month view points Strongest prospects Information Technology
XLK
▲ Turning up | +0.46 |
| | Industrials
XLI
▶ Steady | +0.37 |
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| Weakest prospects Financials
XLF
▼ Weakening | −0.75 |
| Real Estate
XLRE
▶ Steady | −0.61 |
| Materials
XLB
▶ Steady | −0.06 |
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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 | Information Technology
XLK | | +0.46 | Leaning Favorable | +0.66 | +0.50 | ▲ +0.39 | | 2 | Energy
XLE | | +0.37 | Leaning Favorable | +0.61 | +0.50 | ▶ −0.06 | | 3 | Industrials
XLI | | +0.37 | Leaning Favorable | +0.52 | +0.50 | ▶ +0.10 | | 4 | Health Care
XLV | | +0.25 | Leaning Favorable | +0.31 | +0.50 | ▶ −0.12 | | 5 | Consumer Staples
XLP | | +0.05 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 6 | Communication Services
XLC | | −0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 7 | Utilities
XLU | | −0.02 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 8 | Consumer Discretionary
XLY | | −0.02 | Neutral | +0.16 | +0.00 | ▶ −0.10 | | 9 | Materials
XLB | | −0.06 | Neutral | −0.08 | +0.00 | ▶ +0.04 | | 10 | Real Estate
XLRE | | −0.61 | Unfavorable | −0.30 | −1.00 | ▶ −0.33 | | 11 | Financials
XLF | | −0.75 | Unfavorable | −0.62 | −1.00 | ▼ −0.92 |
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 |
Expansion continued at modest to moderate rates; four districts slowed; Boston and Atlanta mixed. | Nearly every district reported at least modest employment gains; labor markets tight in five districts; skill shortages in nine. | | Inflation Pressure (higher = headwind) | | +0.00 |
Little change in overall price pressures; lumber and retail prices lower; food costs rising. | Financial-market developments led to tighter mortgage standards in most districts; more than half tightened standards overall; delinquencies rising in four districts. | Reduced credit availability adds uncertainty about the housing turnaround; Boston, Richmond, Minneapolis and Dallas see volatility slowing business; manufacturers in four districts optimistic. |
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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 | · | · | · | · | +1 | · | · | +1 | | FinancialsXLF | −1 | −1 | · | · | −1 | −1 | −1 | · | · | +1 | −1 | · | | Consumer DiscretionaryXLY | · | +1 | · | · | −1 | · | · | +1 | +1 | +1 | · | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | +1 | +1 | · | +1 | · | · | +1 | +1 | +1 | · | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | +1 | −1 | · | −1 | −1 | −1 | −1 | · | · | −1 | · | | MaterialsXLB | · | · | · | · | · | · | · | · | +1 | · | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Financials −1 New York, Boston, Atlanta, Chicago, Dallas, Richmond Credit standards tightened; loan demand weaker. Why it matters: Broad Financials drag. | Real Estate −1 Philadelphia, Richmond, Atlanta, Chicago, St. Louis, Dallas Home sales slowed dramatically. Why it matters: Broad Real Estate drag. | Real Estate +1 New York Manhattan apartment sales brisk; rents up 10-15%. Why it matters: Real Estate support. | Industrials +1 broad−based Broad-based Manufacturing shipments and orders rose. Why it matters: Industrials support. | Information Technology +1 San Francisco, Boston, Dallas IT sales and software demand grew. Why it matters: IT positive. | Consumer Discretionary −1 Richmond Retail sales pulled back sharply. Why it matters: Discretionary drag. |
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Twelve Fed districts District roundup Boston Flat Outlook ▶ Similar results; increased uncertainty. |
| New York Growing +0.5 Outlook ▲ Continued to expand. |
| Philadelphia Growing +0.5 Outlook ▲ Expanded; pace eased somewhat. |
| Cleveland Growing +0.5 Outlook ▲ Grew at a modest pace. |
| Richmond Flat Outlook ▶ Grew at a somewhat slower pace. |
| Atlanta Flat Outlook ▶ Remained mixed. |
| Chicago Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| St. Louis Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly. |
| Kansas City Growing +0.5 Outlook ▲ Expanded at a moderate pace. |
| Dallas Flat Outlook ▶ Continued to decelerate. |
| San Francisco Growing +0.5 Outlook ▲ Expanded; momentum slowed a bit. |
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Where the signal is thin or split Divergences to watch | Financials — Six -1s, including New York, give the weakest weighted Financials score of the period.
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| | Real Estate — Residential declines broaden to six -1s as mortgage credit tightens.
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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 |