EconomyxAI · Sector Watch August 2020Released September 2, 2020 |
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Conditions index +0.24 avg of 11 sectors, −2 to +2 |
| Outlook index +0.05 sectors with an outlook |
| Districts growing 8/12 per National Summary |
| Positive momentum 9/11 sectors improving |
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This release in brief The read | ■ | Released September 2, 2020, with information collected on or before August 24, 2020. | | ■ | Economic activity increased in most districts but gains were generally modest and activity remained well below pre-pandemic levels. | | ■ | Manufacturing rose in most districts alongside ports and distribution; consumer spending continued to pick up on vehicle sales, though growth slowed in many districts. | | ■ | Residential construction and home sales were bright spots while commercial real estate contracted; loan demand up slightly on mortgages; energy subdued; outlook modestly optimistic but uncertain. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▲ Improving | +0.68 |
| Real Estate
XLRE
▶ Steady | +0.66 |
| Information Technology
XLK
▶ Steady | +0.54 |
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| Weakest prospects | Financials
XLF
▶ Steady | −0.23 |
| Consumer Staples
XLP
▼ Weakening | −0.05 |
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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 | Industrials
XLI | | +0.68 | Favorable | +0.97 | +0.50 | ▲ +1.50 | | 2 | Real Estate
XLRE | | +0.66 | Favorable | +0.83 | +0.50 | ▶ +1.10 | | 3 | Information Technology
XLK | | +0.54 | Favorable | +0.66 | +0.50 | ▶ +0.69 | | 4 | Health Care
XLV | | +0.31 | Leaning Favorable | +0.21 | +0.50 | ▶ +0.24 | | 5 | Materials
XLB | | +0.29 | Leaning Favorable | +0.44 | +0.00 | ▲ +0.70 | | 6 | Consumer Discretionary
XLY | | +0.23 | Leaning Favorable | +0.20 | +0.00 | ▼ +0.74 | | 7 | Utilities
XLU | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.04 | | 8 | Communication Services
XLC | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Consumer Staples
XLP | | −0.05 | Neutral | +0.13 | +0.00 | ▼ −0.40 | | 10 | Financials
XLF | | −0.23 | Leaning Unfavorable | −0.07 | −0.50 | ▶ +0.03 | | 11 | Energy
XLE | | −0.51 | Unfavorable | −0.69 | −1.00 | ▶ +0.49 |
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 gains in most districts from depressed levels. | Employment increased overall, led by manufacturing; some furloughs turning permanent. | | Inflation Pressure (higher = headwind) | | +0.25 |
Price pressures increased but remained modest; lumber spiked. | Loan demand up slightly on residential mortgages. | Modestly optimistic but with pessimism in a few districts. |
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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 | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | · | · | +1 | +1 | +1 | +2 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | +1 | · | · | · | · | +1 | · | · | | EnergyXLE | · | · | · | · | · | −1 | · | −1 | −1 | −1 | −1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | −1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +2 | +1 | | MaterialsXLB | · | · | · | +1 | · | · | +1 | +1 | · | · | · | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Chicago Manufacturing production increased strongly. Why it matters: Strongest Industrials read. | Real Estate +2 Dallas Existing-home sales climbed sharply. Why it matters: Strongest RE read. | Industrials +1 broad−based Broad-based Manufacturing rose in most districts. Why it matters: Industrials positive in nine districts. | Real Estate +1 broad−based Broad-based Residential sales and construction were bright spots. Why it matters: RE positive in most districts. | Information Technology +1 San Francisco Strong sales in meeting technologies and delivery services. Why it matters: SF carries 47% of IT weight. | Energy −1 Dallas Energy activity remained depressed. Why it matters: Dallas carries the largest Energy weight. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▶ Continued to pick up modestly. |
| New York Flat Outlook ▶ Growth stalled. |
| Philadelphia Flat Outlook ▶ Changed little. |
| Cleveland Growing +0.5 Outlook ▲ Grew modestly. |
| Richmond Growing +0.5 Outlook ▲ Continued to expand. |
| Atlanta Flat Outlook ▲ Mixed. |
| Chicago Growing +1.5 Outlook ▲ Increased strongly. |
| St. Louis Growing +0.5 Outlook ▼ Increased modestly. |
| Minneapolis Growing +0.5 Outlook ▶ Grew slightly. |
| Kansas City Growing +1.0 Outlook ▲ Strengthened moderately. |
| Dallas Flat Outlook ▶ COVID-19 disrupted budding recovery. |
| San Francisco Growing +0.5 Outlook ▶ Expanded slightly. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco +1 at 47% weight lifts weighted IT above the unweighted average.
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| | Real Estate — Dallas +2 and broad +1 readings lift weighted Real Estate despite New York weakness.
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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 |