EconomyxAI · Beige Book Sector Monitor August 2008Released September 3, 2008 |
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Conditions index −0.07 avg of 11 sectors, −2 to +2 |
| Outlook index −0.12 sectors with an outlook |
| Districts growing 2/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released September 3, 2008, with information collected before August 25, 2008. | | ■ | Activity was slow in most districts, described as 'weak,' 'soft' or 'subdued'; Cleveland and St. Louis weakened, Boston and New York showed signs of stabilizing, and Kansas City improved slightly. | | ■ | Consumers concentrated on necessities and cut discretionary purchases; motor vehicle sales were weak or falling in every district, while foreign visitors supported tourism. | | ■ | Manufacturing declined in most districts but improved in Minneapolis and Kansas City; residential real estate stayed soft everywhere except Kansas City and commercial real estate weakened everywhere but Dallas. | | ■ | Every district reporting on standards noted tightening; energy and mining were strong and expanding in every reporting district, while some commodity prices eased from highs. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Consumer Staples
XLP
▶ Steady | +0.18 |
| Information Technology
XLK
▶ Steady | +0.08 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.58 |
| Consumer Discretionary
XLY
▶ Steady | −0.56 |
| Financials
XLF
▶ Steady | −0.45 |
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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 | | +0.85 | Favorable | +1.45 | +1.00 | ▶ +0.19 | | 2 | Consumer Staples
XLP | | +0.18 | Leaning Favorable | +0.47 | n/a | ▶ +0.21 | | 3 | Information Technology
XLK | | +0.08 | Neutral | +0.42 | n/a | ▶ −0.12 | | 4 | Materials
XLB | | +0.00 | Neutral | +0.13 | n/a | ▶ −0.14 | | 5 | Utilities
XLU | | −0.03 | Neutral | +0.00 | n/a | ▶ +0.00 | | 6 | Communication Services
XLC | | −0.04 | Neutral | +0.00 | n/a | ▶ +0.03 | | 7 | Industrials
XLI | | −0.21 | Leaning Unfavorable | −0.18 | −0.04 | ▶ −0.07 | | 8 | Health Care
XLV | | −0.30 | Leaning Unfavorable | −0.17 | n/a | ▼ −0.57 | | 9 | Financials
XLF | | −0.45 | Leaning Unfavorable | −0.79 | −0.50 | ▶ +0.28 | | 10 | Consumer Discretionary
XLY | | −0.56 | Unfavorable | −0.96 | −0.56 | ▶ +0.12 | | 11 | Real Estate
XLRE | | −0.58 | Unfavorable | −1.19 | −0.52 | ▶ +0.01 |
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 |
Activity slow in most districts; Cleveland and St. Louis weakened; Boston and New York stabilizing; Kansas City slightly better. | Labor markets unchanged or softer; general pullback in hiring; energy workers in demand. | | Inflation Pressure (higher = headwind) | | −1.25 |
Upward price pressure continued, though several districts saw retreats in commodity and energy prices. | All districts reporting on standards noted tightening; residential and consumer loan demand easing. | Near-term outlook 'more of the same' or further slowing; Kansas City and Philadelphia manufacturers positive. |
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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 | −1 | · | −1 | | Consumer DiscretionaryXLY | · | · | −1 | · | · | −1 | −1 | −1 | −1 | · | −1 | −2 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | · | · | −1 | −1 | −1 | · | −1 | +1 | +1 | −1 | +1 | | Consumer StaplesXLP | · | · | +1 | · | · | · | +1 | · | · | · | +1 | +1 | | EnergyXLE | · | · | · | +1 | · | · | · | · | +2 | +2 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | −1 | −1 | −1 | −1 | −1 | −2 | −1 | −1 | · | · | −2 | | MaterialsXLB | · | · | · | +1 | · | · | · | · | +2 | +1 | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy +2 Dallas Rig count rising above last year, led by natural gas. Why it matters: Energy leads. | Consumer Discretionary −2 San Francisco Furniture and appliance sales exceptionally poor. Why it matters: Largest Discretionary weight. | Real Estate −2 San Francisco Housing slump continued. Why it matters: Large Real Estate weight. | Real Estate −2 Chicago Residential construction declining faster; cancellations. Why it matters: Deepens Real Estate. | Energy +2 Kansas City, Minneapolis Drilling well above year-ago; energy activity rising. Why it matters: Broad Energy strength. | Consumer Discretionary −1 All districts Motor vehicle sales weak or falling everywhere. Why it matters: Discretionary broad negative. |
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Twelve Fed districts District roundup Boston Contracting −0.5 Little further deterioration; software and IT sales rising. |
| New York Contracting −0.5 Signs of stabilizing; tourism firmed. |
| Philadelphia Contracting −0.5 Outlook ▲ Remained soft; manufacturers optimistic. |
| Cleveland Contracting −0.5 Weakened somewhat since mid-July. |
| Richmond Contracting −1.0 Remained weak; tourism a bright spot. |
| Atlanta Contracting −1.0 Outlook ▼ Weak levels of activity. |
| Chicago Contracting −0.5 Sluggish; manufacturing steady. |
| St. Louis Contracting −1.0 Softened; services and manufacturing declining. |
| Minneapolis Contracting −1.0 Stagnant; mines at full capacity. |
| Kansas City Growing +0.5 Outlook ▲ Improved slightly; manufacturing rebounded. |
| Dallas Growing +0.5 Expanded modestly; slightly softer. |
| San Francisco Contracting −1.0 Subdued; housing slump continued. |
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Where the signal is thin or split Divergences to watch | ENERGY vs CONSUMER: energy strength persists as consumers cut discretionary purchases.
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| | Consumer Staples — trade-down to discount stores in four districts.
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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 |