EconomyxAI · Sector Watch August 2016Released September 7, 2016 |
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Conditions index +0.12 avg of 11 sectors, −2 to +2 |
| Outlook index +0.28 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released September 7, 2016, with information collected on or before August 29, 2016. | | ■ | National activity continued to expand at a modest pace; Kansas City and New York reported no change, Philadelphia and Richmond slowed. | | ■ | Consumer spending little changed with auto sales declining from high levels; manufacturing rose slightly; nonfinancial services gained momentum. | | ■ | Residential real estate grew moderately, commercial real estate expanded, credit demand moderate with stable quality, energy demand weakened. |
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Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▶ Steady | +0.43 |
| Financials
XLF
▶ Steady | +0.36 |
| Health Care
XLV
▶ Steady | +0.32 |
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| Weakest prospects Consumer Discretionary
XLY
▼ Weakening | −0.17 |
| Materials
XLB
▶ Steady | −0.14 |
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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 | Real Estate
XLRE | | +0.43 | Leaning Favorable | +0.99 | +0.46 | ▶ −0.24 | | 2 | Financials
XLF | | +0.36 | Leaning Favorable | +0.78 | +0.50 | ▶ +0.08 | | 3 | Health Care
XLV | | +0.32 | Leaning Favorable | +0.28 | +0.50 | ▶ +0.18 | | 4 | Industrials
XLI | | +0.26 | Leaning Favorable | +0.22 | +0.56 | ▶ −0.06 | | 5 | Information Technology
XLK | | +0.24 | Leaning Favorable | +0.16 | +0.50 | ▶ −0.09 | | 6 | Utilities
XLU | | +0.08 | Neutral | +0.15 | +0.00 | ▶ +0.15 | | 7 | Consumer Staples
XLP | | +0.05 | Neutral | +0.00 | +0.00 | ▶ +0.22 | | 8 | Communication Services
XLC | | +0.04 | Neutral | +0.00 | +0.00 | ▶ +0.07 | | 9 | Energy
XLE | | +0.03 | Neutral | −0.53 | +0.47 | ▶ +0.15 | | 10 | Materials
XLB | | −0.14 | Neutral | −0.28 | +0.00 | ▶ −0.21 | | 11 | Consumer Discretionary
XLY | | −0.17 | Leaning Unfavorable | −0.40 | +0.09 | ▼ −0.53 |
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 pace overall; two districts flat, two slowed. | Labor markets tight with moderate payroll growth; wage pressures increased. | | Inflation Pressure (higher = headwind) | | +0.25 |
Price increases slight overall. | Credit demand grew at a moderate pace; stable quality. | Contacts expect moderate growth in coming months; election uncertainty. |
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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 | | FinancialsXLF | · | +1 | +1 | · | · | +1 | +1 | +1 | · | · | −1 | +2 | | Consumer DiscretionaryXLY | +1 | · | · | · | −1 | −1 | −1 | · | · | −1 | −1 | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | −1 | · | +1 | · | +1 | +1 | +1 | · | −1 | · | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | −1 | · | −1 | · | · | −1 | · | | UtilitiesXLU | · | · | · | +1 | · | · | +1 | · | · | · | · | · | | Real EstateXLRE | · | · | +1 | +1 | +1 | +1 | +1 | · | · | · | +1 | +2 | | MaterialsXLB | · | · | · | −1 | · | · | · | −1 | +1 | · | · | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Consumer Discretionary −1 Richmond, Atlanta, Chicago, Kansas City, Dallas Retail sales softened or declined. Why it matters: CD falls to neutral. | Financials +2 San Francisco Loan growth was strong. Why it matters: Large FN weight. | Real Estate +2 San Francisco Residential construction robust; capacity constraints. Why it matters: Large RE weight. | Information Technology 0 San Francisco Semiconductor production flat; capacity underutilized. Why it matters: SF IT weight neutral. | Information Technology +1 Minneapolis, St. Louis, Kansas City, Dallas IT industry expanded; tech manufacturing up modestly. Why it matters: Modest IT support. | Materials −1 Cleveland, St. Louis, San Francisco Steel demand contracted further. Why it matters: Materials negative. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Continues to increase. |
| New York Flat Outlook ▶ Little to no growth. |
| Philadelphia Growing +0.2 Outlook ▲ Grew slightly. |
| Cleveland Growing +0.5 Outlook ▲ Grown at a modest pace. |
| Richmond Growing +0.2 Outlook ▲ Growth slowed. |
| Atlanta Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| Chicago Growing +1.0 Outlook ▲ Picked up to a moderate pace. |
| St. Louis Growing +0.5 Outlook ▲ Slightly improved. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly. |
| Kansas City Flat Outlook ▲ Largely flat. |
| Dallas Growing +0.2 Outlook ▲ Expanded slightly. |
| San Francisco Growing +1.0 Outlook ▲ Moderate pace. |
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Where the signal is thin or split Divergences to watch | Consumer Discretionary — Five district declines push weighted CD to around zero.
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| | Financials — San Francisco +2 lifts the weighted Financials score.
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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 |