EconomyxAI · Sector Watch August 2010Released September 8, 2010 |
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Conditions index +0.15 avg of 11 sectors, −2 to +2 |
| Outlook index −0.01 sectors with an outlook |
| Districts growing 7/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Released September 8, 2010, with information collected before August 30, 2010. | | ■ | National economic activity kept growing, but with widespread signs of deceleration; the five western districts described modest growth, Boston and Cleveland saw net improvement, and New York, Philadelphia, Richmond, Atlanta and Chicago reported mixed conditions or slowing. | | ■ | Consumer spending rose slightly on balance despite caution, with emphasis on necessities, while travel and tourism picked up in both business and leisure segments. | | ■ | Manufacturing expanded further but more slowly, with construction-related products weak and semiconductors and metals firm; home sales slowed further after the tax credit expired, and commercial real estate stayed depressed. | | ■ | Lending was stable to slightly lower with modest credit-quality improvements; agriculture and natural resource extraction expanded on rising global demand, and price pressures stayed limited. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Improving | +0.82 |
| Information Technology
XLK
▶ Steady | +0.21 |
| Materials
XLB
▲ Turning up | +0.15 |
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| Weakest prospects Real Estate
XLRE
▶ Steady | −0.60 |
| Financials
XLF
▼ Weakening | −0.31 |
| Industrials
XLI
▶ Steady | −0.08 |
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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 | | +0.82 | Favorable | +1.45 | +0.55 | ▲ +0.79 | | 2 | Information Technology
XLK | | +0.21 | Leaning Favorable | +0.70 | +0.00 | ▶ +0.09 | | 3 | Materials
XLB | | +0.15 | Leaning Favorable | +0.28 | +0.00 | ▲ +0.12 | | 4 | Consumer Staples
XLP | | +0.04 | Neutral | +0.27 | +0.00 | ▲ +0.12 | | 5 | Communication Services
XLC | | −0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 6 | Utilities
XLU | | −0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 7 | Health Care
XLV | | −0.02 | Neutral | +0.01 | +0.00 | ▶ −0.10 | | 8 | Consumer Discretionary
XLY | | −0.04 | Neutral | +0.34 | −0.10 | ▶ −0.18 | | 9 | Industrials
XLI | | −0.08 | Neutral | +0.43 | −0.10 | ▶ −0.51 | | 10 | Financials
XLF | | −0.31 | Leaning Unfavorable | −0.59 | +0.00 | ▼ −0.81 | | 11 | Real Estate
XLRE | | −0.60 | Unfavorable | −1.20 | −0.50 | ▶ −0.34 |
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 | | +0.25 |
Continued growth with widespread deceleration; five western districts modest growth; five eastern districts mixed or slowing. | Labor markets slack; temp-to-permanent conversions; skill mismatches in narrow sectors. | | Inflation Pressure (higher = headwind) | | +0.25 |
Price pressures limited except some commodities; limited pass-through. | Lending stable to slightly down; standards largely unchanged; modest credit-quality improvements. | Many expect slower growth through year-end; uncertainty prevalent. |
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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 | +1 | | Health CareXLV | +1 | · | · | +1 | · | · | +1 | · | · | · | · | −1 | | FinancialsXLF | · | −1 | · | · | · | −1 | · | · | · | · | −1 | −1 | | Consumer DiscretionaryXLY | +1 | · | · | +1 | −1 | −1 | +1 | · | +1 | +1 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | · | · | · | · | · | · | +1 | +1 | · | +1 | +1 | | Consumer StaplesXLP | · | · | +1 | · | · | · | · | · | · | · | · | +1 | | EnergyXLE | · | · | · | +1 | · | +1 | · | · | +1 | +2 | +2 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | −1 | −2 | · | −2 | −2 | −1 | · | −1 | −2 | −1 | −1 | | 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 Energy sector remained a source of strength. Why it matters: Largest Energy weight. | Energy +2 Kansas City Energy activity expanded solidly. Why it matters: Energy leads. | Real Estate −2 Philadelphia, Atlanta, Kansas City, Richmond No rebound from post-tax-credit drop. Why it matters: Real Estate at bottom. | Information Technology +1 San Francisco Continued strength for IT product makers. Why it matters: Largest IT weight. | Industrials 0 Seven districts Manufacturing growth slowed or demand softened. Why it matters: Industrials cooling. | Consumer Discretionary +1 Most districts Non-auto retail sales rose. Why it matters: Discretionary positive. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▶ Positive on average. |
| New York Flat Outlook ▶ Signs of decelerating. |
| Philadelphia Flat Outlook ▶ Mixed. |
| Cleveland Growing +0.5 Outlook ▶ Slight improvement. |
| Richmond Flat Outlook ▶ Signs of slowing more prevalent. |
| Atlanta Contracting −0.5 Outlook ▼ Pace continued to slow. |
| Chicago Flat Outlook ▲ Pace moderated. |
| St. Louis Growing +0.5 Outlook ▶ Grown modestly. |
| Minneapolis Growing +0.5 Outlook ▶ Grew modestly. |
| Kansas City Growing +0.5 Outlook ▶ Modest growth; energy solid. |
| Dallas Growing +0.5 Outlook ▶ Expanded modestly; energy strong. |
| San Francisco Growing +0.5 Outlook ▶ Expanded modestly. |
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Where the signal is thin or split Divergences to watch | Deceleration — eastern districts slowed while western districts held modest growth.
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| | Energy Leads Again — global demand returned Energy to the top sector.
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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 |