EconomyxAI · Sector Watch August 2017Released September 6, 2017 |
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Conditions index +0.32 avg of 11 sectors, −2 to +2 |
| Outlook index +0.23 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Released September 6, 2017, with information collected on or before August 28, 2017; most district reports predate Hurricane Harvey. | | ■ | All twelve districts expanded at a modest to moderate pace; New York and Cleveland picked up to moderate while Chicago slowed to modest. | | ■ | Consumer spending rose on nonauto retail and tourism, vehicle sales mixed; manufacturing expanded modestly with concern about a prolonged auto slowdown. | | ■ | Construction up slightly; low home inventories weighed on sales; loan demand grew modestly; employment growth slowed amid tight labor markets. |
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Sector prospects Where the 3–12 month view points Strongest prospects Information Technology
XLK
▶ Steady | +0.52 |
| Real Estate
XLRE
▶ Steady | +0.45 |
| Industrials
XLI
▶ Steady | +0.41 |
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| Weakest prospects Energy
XLE
▼ Turning down | −0.19 |
| Health Care
XLV
▼ Turning down | −0.17 |
| Consumer Staples
XLP
▶ Steady | −0.07 |
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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 | Information Technology
XLK | | +0.52 | Favorable | +0.68 | +0.73 | ▶ +0.14 | | 2 | Real Estate
XLRE | | +0.45 | Leaning Favorable | +0.96 | +0.50 | ▶ −0.14 | | 3 | Industrials
XLI | | +0.41 | Leaning Favorable | +1.00 | +0.50 | ▶ +0.06 | | 4 | Materials
XLB | | +0.36 | Leaning Favorable | +0.43 | +0.50 | ▶ −0.01 | | 5 | Financials
XLF | | +0.23 | Leaning Favorable | +0.36 | +0.50 | ▶ −0.04 | | 6 | Consumer Discretionary
XLY | | +0.21 | Leaning Favorable | +0.30 | +0.06 | ▲ +0.45 | | 7 | Communication Services
XLC | | +0.04 | Neutral | +0.05 | +0.00 | ▶ +0.03 | | 8 | Utilities
XLU | | −0.02 | Neutral | +0.00 | +0.00 | ▶ −0.10 | | 9 | Consumer Staples
XLP | | −0.07 | Neutral | −0.13 | +0.00 | ▶ −0.15 | | 10 | Health Care
XLV | | −0.17 | Leaning Unfavorable | −0.30 | +0.00 | ▼ −0.42 | | 11 | Energy
XLE | | −0.19 | Leaning Unfavorable | +0.15 | −0.26 | ▼ −0.54 |
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 | | +0.50 |
All twelve districts expanded at a modest to moderate pace. | Employment growth slowed to slight to modest; labor widely tight. | | Inflation Pressure (higher = headwind) | | +0.50 |
Prices rose modestly; freight, lumber and steel costs up. | Loan demand grew modestly with rising competition. | Outlooks positive but less optimistic in several districts; Hurricane Harvey disrupting Gulf Coast. |
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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 | +2 | · | +1 | +1 | · | · | · | · | · | +1 | · | +1 | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | −1 | −1 | | FinancialsXLF | · | · | +1 | +1 | · | · | · | +1 | · | · | +1 | +1 | | Consumer DiscretionaryXLY | · | +1 | −1 | · | · | · | +1 | −1 | · | −1 | +2 | · | | Communication ServicesXLC | · | · | · | · | +1 | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | +1 | −1 | | EnergyXLE | · | · | +1 | +1 | · | · | · | · | · | +1 | · | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | +1 | · | +1 | +1 | · | +1 | · | · | · | +1 | +2 | | MaterialsXLB | · | · | · | +1 | · | · | · | · | · | · | +1 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Information Technology +2 Boston Semiconductor sales up more than 30 percent. Why it matters: Strong IT read. | Real Estate +2 San Francisco Real estate activity grew at a robust pace. Why it matters: SF carries large Real Estate weight. | Information Technology +1 San Francisco Semiconductor new orders rose strongly; cloud investment. Why it matters: SF carries 47% of IT weight. | Industrials +1 broad−based Broad-based Manufacturing expanded in all twelve districts. Why it matters: Industrials positive everywhere. | Consumer Discretionary +2 Dallas Retail sales expanded at a markedly faster clip. Why it matters: Strong Discretionary read. | Consumer Discretionary −1 Philadelphia, St. Louis, Kansas City Auto sales declined; retail and tourism softer. Why it matters: Discretionary offsets. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Expanded modestly to moderately. |
| New York Growing +1.0 Outlook ▲ Picked up to a moderate pace. |
| Philadelphia Growing +0.5 Outlook ▲ Resumed a modest pace. |
| Cleveland Growing +1.0 Outlook ▲ Grew at a moderate pace. |
| Richmond Growing +0.5 Outlook ▲ Continued to expand modestly. |
| Atlanta Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| Chicago Growing +0.5 Outlook ▲ Slowed to a modest pace. |
| St. Louis Growing +0.5 Outlook ▶ Improved at a modest pace. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly overall. |
| Kansas City Growing +0.5 Outlook ▲ Increased modestly. |
| Dallas Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco +1 at 47% weight plus Boston +2 keep weighted IT clearly positive.
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| | Consumer Discretionary — Dallas +2 lifts the weighted score while three districts sit at -1.
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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 |