EconomyxAI · Sector Watch August 2011Released September 7, 2011 |
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Conditions index +0.07 avg of 11 sectors, −2 to +2 |
| Outlook index +0.02 sectors with an outlook |
| Districts growing 7/12 per National Summary |
| Positive momentum 2/11 sectors improving |
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This release in brief The read | ■ | Released September 7, 2011, with information collected on or before August 26, 2011. | | ■ | Activity continued to expand at a modest pace, but Boston and Philadelphia were mixed, Richmond slowed, and New York stayed sluggish. | | ■ | Stock market volatility and economic uncertainty led many contacts to downgrade near-term outlooks; non-auto retail was flat or down in several districts. | | ■ | Manufacturing slowed in many districts and declined in New York, Philadelphia and Richmond; housing stayed weak and commercial real estate little changed. | | ■ | Loan demand was stable or slightly weaker with improving quality, energy kept expanding, and price pressures edged lower. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▼ Weakening | +0.22 |
| Materials
XLB
▶ Steady | +0.20 |
| Health Care
XLV
▲ Turning up | +0.17 |
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| Weakest prospects Financials
XLF
▼ Weakening | −0.34 |
| Consumer Discretionary
XLY
▼ Turning down | −0.21 |
| Information Technology
XLK
▼ Weakening | −0.21 |
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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 | | +0.22 | Leaning Favorable | +0.52 | +0.59 | ▼ −0.83 | | 2 | Materials
XLB | | +0.20 | Leaning Favorable | +0.48 | +0.00 | ▶ +0.18 | | 3 | Health Care
XLV | | +0.17 | Leaning Favorable | +0.40 | +0.00 | ▲ +0.36 | | 4 | Industrials
XLI | | +0.00 | Neutral | +0.38 | −0.01 | ▼ −0.37 | | 5 | Utilities
XLU | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 6 | Communication Services
XLC | | −0.02 | Neutral | +0.00 | +0.00 | ▶ −0.03 | | 7 | Consumer Staples
XLP | | −0.12 | Neutral | −0.14 | +0.00 | ▶ −0.17 | | 8 | Real Estate
XLRE | | −0.15 | Neutral | −0.27 | −0.11 | ▶ −0.07 | | 9 | Information Technology
XLK | | −0.21 | Leaning Unfavorable | −0.12 | −0.01 | ▼ −0.72 | | 10 | Consumer Discretionary
XLY | | −0.21 | Leaning Unfavorable | −0.01 | −0.18 | ▼ −0.41 | | 11 | Financials
XLF | | −0.34 | Leaning Unfavorable | −0.45 | −0.09 | ▼ −0.70 |
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 |
Modest expansion overall, but mixed or weakening activity in several districts. | Labor markets generally stable; modest employment growth in some districts; hiring cautious. | | Inflation Pressure (higher = headwind) | | +0.25 |
Price pressures edged lower; raw material prices stabilized or declined in several districts. | Loan demand stable or slightly weaker; New York and Chicago reported tightening. | Stock market volatility and uncertainty led contacts to downgrade outlooks. |
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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 | · | · | · | +1 | | FinancialsXLF | · | −1 | −1 | +1 | · | −1 | −1 | +1 | · | −1 | · | · | | Consumer DiscretionaryXLY | · | · | −1 | +1 | −1 | · | · | −1 | +1 | +1 | · | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | −1 | −1 | · | −1 | +1 | +1 | +1 | +1 | +1 | · | +1 | | Consumer StaplesXLP | · | · | −1 | · | · | · | · | · | · | · | −1 | · | | EnergyXLE | · | · | · | +1 | · | +1 | · | +1 | +1 | +1 | +1 | −1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | · | −1 | −1 | −1 | · | −1 | −1 | +1 | · | · | · | | MaterialsXLB | · | · | −1 | · | · | · | +1 | · | +1 | · | +1 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Financials −1 New York Delinquencies rose; standards tightened for commercial loans. Why it matters: New York carries 28% of Financials weight. | Industrials −1 New York, Philadelphia, Richmond Manufacturing weakened or contracted. Why it matters: Three negatives pull Industrials toward neutral. | Energy +1 Dallas, Kansas City, Minneapolis Land-based oil drilling increased; further gains expected. Why it matters: Dallas holds 45% of Energy weight. | Energy −1 San Francisco Demand down slightly for energy natural resources. Why it matters: SF's 20% Energy weight trims the sector. | Health Care +1 Boston, Richmond, St. Louis, San Francisco Solid demand for health-care services. Why it matters: Lifts Health Care as a defensive bright spot. | Real Estate −1 Boston, Philadelphia, Cleveland, Richmond, Chicago, St. Louis Housing sluggish; activity slowed or weakened. Why it matters: Broad negative keeps Real Estate down. |
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Twelve Fed districts District roundup Boston Flat Outlook ▼ Mixed results; outlook increasingly uncertain. |
| New York Flat Outlook ▶ Growth remained sluggish. |
| Philadelphia Contracting −0.5 Outlook ▼ More mixed and somewhat weaker. |
| Cleveland Growing +0.5 Outlook ▼ Grew at a slow pace. |
| Richmond Contracting −0.5 Outlook ▶ Slowed. |
| Atlanta Flat Outlook ▼ Expanded at a very subdued pace. |
| Chicago Growing +0.5 Outlook ▶ Expanded more slowly. |
| St. Louis Growing +0.5 Outlook ▶ Grew at a modest pace. |
| Minneapolis Growing +0.5 Outlook ▲ Grew slightly. |
| Kansas City Growing +0.5 Outlook ▲ Expanded modestly. |
| Dallas Growing +0.5 Outlook ▼ Grew at a modest pace. |
| San Francisco Growing +0.5 Outlook ▶ Expanded modestly. |
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Where the signal is thin or split Divergences to watch | Financials — New York (-1, 28% weight) drives the weighted score well below the unweighted average.
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| | Industrials — declines along the Atlantic seaboard offset by modest gains in the interior and West.
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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 |