EconomyxAI · Sector Watch August 2018Released September 12, 2018 |
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Conditions index +0.33 avg of 11 sectors, −2 to +2 |
| Outlook index +0.21 sectors with an outlook |
| Districts growing 11/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Released September 12, 2018, with information collected on or before August 31, 2018. | | ■ | The economy expanded at a moderate pace; Dallas brisk, while Philadelphia, St. Louis and Kansas City grew somewhat below average. | | ■ | Consumer spending grew modestly and tourism expanded; manufacturing grew moderately in most districts but was flat in St. Louis and declined in Richmond. | | ■ | Home sales softer; lending grew everywhere; trade tensions prompted some firms to scale back or postpone capital investment. |
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Sector prospects Where the 3–12 month view points Strongest prospects Financials
XLF
▶ Steady | +0.47 |
| Consumer Discretionary
XLY
▶ Steady | +0.41 |
| Industrials
XLI
▼ Weakening | +0.27 |
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| Weakest prospects Energy
XLE
▼ Turning down | −0.04 |
| Consumer Staples
XLP
▶ Steady | −0.00 |
| Utilities
XLU
▶ Steady | +0.01 |
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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 | Financials
XLF | | +0.47 | Leaning Favorable | +0.82 | +0.47 | ▶ +0.15 | | 2 | Consumer Discretionary
XLY | | +0.41 | Leaning Favorable | +0.76 | +0.50 | ▶ +0.11 | | 3 | Industrials
XLI | | +0.27 | Leaning Favorable | +0.93 | +0.44 | ▼ −0.42 | | 4 | Information Technology
XLK | | +0.16 | Leaning Favorable | +0.04 | +0.50 | ▶ −0.28 | | 5 | Health Care
XLV | | +0.11 | Neutral | +0.19 | +0.00 | ▶ +0.23 | | 6 | Real Estate
XLRE | | +0.10 | Neutral | +0.42 | +0.17 | ▼ −0.45 | | 7 | Materials
XLB | | +0.10 | Neutral | +0.27 | +0.00 | ▶ −0.23 | | 8 | Communication Services
XLC | | +0.05 | Neutral | +0.05 | +0.00 | ▶ +0.07 | | 9 | Utilities
XLU | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 10 | Consumer Staples
XLP | | −0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Energy
XLE | | −0.04 | Neutral | +0.16 | +0.28 | ▼ −0.73 |
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 |
Moderate national expansion; Dallas brisk; three districts below average. | Employment grew modestly or moderately; shortages constraining sales in six districts. | | Inflation Pressure (higher = headwind) | | +0.50 |
Final prices modest to moderate with some deceleration; input pressures widespread. | Lending activity grew throughout the nation. | Near-term outlook optimistic but trade tensions prompting delayed capital investment. |
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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 | · | · | · | · | · | · | · | | FinancialsXLF | · | +1 | +1 | +1 | · | +1 | +1 | −1 | · | · | +2 | +1 | | Consumer DiscretionaryXLY | +1 | · | +1 | · | +1 | +1 | +1 | · | +1 | · | +1 | +1 | | Communication ServicesXLC | · | · | · | · | +1 | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | · | +1 | +1 | · | +1 | +1 | · | +1 | +1 | +2 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | · | · | +1 | · | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | · | · | −1 | +1 | +1 | · | · | · | · | · | +1 | | MaterialsXLB | · | · | · | +1 | · | · | · | · | +1 | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Dallas Robust manufacturing expansion; transportation markedly strong. Why it matters: Strong Industrials read. | Financials +2 Dallas Loan volumes and demand expanded at a faster pace. Why it matters: Strong Financials read. | Industrials +1 broad−based Broad-based Manufacturing grew moderately in most districts. Why it matters: Industrials positive. | Consumer Discretionary +1 broad−based Broad-based Retail sales and tourism grew. Why it matters: Discretionary positive across nine districts. | Energy 0 Dallas Drilling leveled off on pipeline constraints. Why it matters: Dallas weight holds Energy down. | Real Estate +1 San Francisco, Richmond, Atlanta Healthy real estate; home sales up. Why it matters: Real Estate support. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| New York Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Philadelphia Growing +0.5 Outlook ▲ Continued at a modest pace. |
| Cleveland Growing +1.0 Outlook ▲ Grew moderately. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a moderate rate. |
| Atlanta Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Chicago Growing +1.0 Outlook ▲ Picked up to a moderate pace. |
| St. Louis Flat Outlook ▶ Improved slightly. |
| Minneapolis Growing +1.0 Outlook ▲ Expanded moderately. |
| Kansas City Growing +0.5 Outlook ▲ Increased modestly. |
| Dallas Growing +1.5 Outlook ▲ Solid expansion continued. |
| 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 | Industrials — Dallas +2 lifts weighted Industrials while Richmond and St. Louis sit at 0.
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| | Energy — Dallas at 0 with the largest Energy weight leaves weighted Energy only mildly positive.
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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 |