EconomyxAI · Sector Watch August 2012Released August 29, 2012 |
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Conditions index +0.25 avg of 11 sectors, −2 to +2 |
| Outlook index +0.08 sectors with an outlook |
| Districts growing 9/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Released August 29, 2012, with information collected on or before August 20, 2012. | | ■ | Activity continued to expand gradually; Philadelphia and Richmond reported slow growth with manufacturing declines and Boston was mixed. | | ■ | Retail activity including autos increased slightly in most districts and tourism was strong; many districts reported softening manufacturing. | | ■ | All twelve districts cited housing improvement, credit conditions improved, energy and mining stayed high, and the Midwest drought cut farm output. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Real Estate
XLRE
▶ Steady | +0.49 |
| Materials
XLB
▲ Turning up | +0.10 |
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| Weakest prospects Information Technology
XLK
▼ Weakening | −0.39 |
| Industrials
XLI
▼ Weakening | −0.26 |
| Health Care
XLV
▼ Weakening | −0.10 |
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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 | | +0.59 | Favorable | +1.01 | +0.72 | ▶ +0.12 | | 2 | Real Estate
XLRE | | +0.49 | Leaning Favorable | +1.04 | +0.43 | ▶ +0.07 | | 3 | Materials
XLB | | +0.10 | Neutral | +0.30 | +0.00 | ▲ +0.09 | | 4 | Consumer Discretionary
XLY | | +0.09 | Neutral | +0.63 | −0.01 | ▶ −0.12 | | 5 | Financials
XLF | | +0.05 | Neutral | +0.43 | +0.03 | ▶ −0.17 | | 6 | Communication Services
XLC | | +0.02 | Neutral | +0.04 | +0.00 | ▶ −0.01 | | 7 | Utilities
XLU | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 8 | Consumer Staples
XLP | | −0.01 | Neutral | +0.00 | +0.00 | ▶ −0.06 | | 9 | Health Care
XLV | | −0.10 | Neutral | −0.10 | +0.00 | ▼ −0.34 | | 10 | Industrials
XLI | | −0.26 | Leaning Unfavorable | −0.28 | −0.03 | ▼ −0.94 | | 11 | Information Technology
XLK | | −0.39 | Leaning Unfavorable | −0.36 | −0.23 | ▼ −0.94 |
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 |
Gradual expansion; six modest, three moderate; Philadelphia and Richmond slow; Boston mixed. | Employment steady or growing only slightly; softening relative to expectations in several districts. | | Inflation Pressure (higher = headwind) | | +0.00 |
Selling prices stable; drought raising agricultural commodity prices. | Credit conditions improved; spreads lower; loan demand up in six districts. | Outlooks uncertain; Europe, elections and fiscal decisions weigh. |
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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 | · | | Consumer DiscretionaryXLY | · | +1 | +1 | · | +1 | · | +1 | · | +1 | +1 | · | +1 | | Communication ServicesXLC | · | · | +1 | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | −1 | −1 | −1 | −1 | −1 | · | · | −1 | · | +1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | +1 | +1 | +1 | · | · | · | · | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +2 | +1 | +1 | | MaterialsXLB | · | · | · | · | · | · | · | · | −1 | · | +1 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Real Estate +2 Kansas City Construction and sales of commercial properties rose; vacancy rates fell. Why it matters: Strongest Real Estate read. | Real Estate +1 broad−based All districts All 12 districts cited increases in home sales, prices or construction. Why it matters: Breadth lifts Real Estate. | Industrials −1 Six districts Demand for manufactured goods was falling. Why it matters: Broad Industrials weakness. | Information Technology −1 San Francisco Slowdown continued for makers of IT equipment. Why it matters: SF carries 47% of IT weight. | Energy +2 Dallas Oil-related activity continues to be strong. Why it matters: Dallas carries 45% of Energy weight. | Financials +1 New York Growth in most lending categories; shrinking spreads. Why it matters: New York holds 28% of Financials weight. |
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Twelve Fed districts District roundup Boston Flat Outlook ▼ Mixed reports; some slowdown. |
| New York Growing +0.5 Outlook ▶ Continued to expand at a modest pace. |
| Philadelphia Flat Outlook ▶ Continued to grow slowly. |
| Cleveland Growing +0.5 Outlook ▶ Grew at a modest pace. |
| Richmond Flat Outlook ▼ Improved somewhat; manufacturing weakened. |
| Atlanta Growing +0.5 Outlook ▶ Expanded at a modest pace. |
| Chicago Growing +0.5 Outlook ▼ Moderate pace, slowing again. |
| St. Louis Growing +0.5 Outlook ▶ Continued to expand at a modest pace. |
| Minneapolis Growing +0.5 Outlook ▶ Grew at a modest pace. |
| Kansas City Growing +1.0 Outlook ▲ Continued to expand at a moderate pace. |
| Dallas Growing +1.0 Outlook ▶ Grew at a moderate pace. |
| San Francisco Growing +0.5 Outlook ▶ Continued to expand at a modest pace. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco (-1, 47% weight) pushes the weighted score below the unweighted average.
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| | Real Estate — Broad-based gains make weighted and unweighted scores similar.
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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 |