EconomyxAI · Sector Watch February 2001Released March 7, 2001 |
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Conditions index −0.05 avg of 11 sectors, −2 to +2 |
| Outlook index −0.02 sectors with an outlook |
| Districts growing 3/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | A majority of districts reported sluggish to modest growth, four were mixed and St. Louis reported noticeably slower activity. | | ■ | Retail sales rose slightly in most districts on deep winter discounting; auto sales steady but below last year with high dealer inventories. | | ■ | Manufacturing declined everywhere except Boston and Richmond, with sharp drops in high-tech and telecom equipment orders in Dallas and Chicago. | | ■ | Home building and sales firmed on lower mortgage rates, while commercial construction eased and dot-com sublet space grew. | | ■ | Bank lending was lackluster apart from refinancing and several districts tightened standards; energy drilling stayed at capacity. |
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Sector prospects Where the 3–12 month view points Strongest prospects | Real Estate
XLRE
▲ Turning up | +0.31 |
| Consumer Staples
XLP
▲ Turning up | +0.22 |
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| Weakest prospects Information Technology
XLK
▶ Steady | −0.48 |
| Financials
XLF
▶ Steady | −0.37 |
| Industrials
XLI
▲ Turning up | −0.24 |
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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 | | +0.42 | Leaning Favorable | +0.61 | n/a | ▶ −0.14 | | 2 | Real Estate
XLRE | | +0.31 | Leaning Favorable | +0.36 | +0.37 | ▲ +0.24 | | 3 | Consumer Staples
XLP | | +0.22 | Leaning Favorable | +0.27 | n/a | ▲ +0.27 | | 4 | Health Care
XLV | | +0.10 | Neutral | +0.29 | n/a | ▶ +0.23 | | 5 | Consumer Discretionary
XLY | | +0.07 | Neutral | −0.02 | +0.35 | ▶ +0.03 | | 6 | Utilities
XLU | | −0.01 | Neutral | +0.00 | n/a | ▶ +0.00 | | 7 | Communication Services
XLC | | −0.12 | Neutral | −0.07 | n/a | ▶ −0.23 | | 8 | Materials
XLB | | −0.23 | Leaning Unfavorable | −0.52 | +0.00 | ▲ +0.42 | | 9 | Industrials
XLI | | −0.24 | Leaning Unfavorable | −0.59 | −0.23 | ▲ +0.18 | | 10 | Financials
XLF | | −0.37 | Leaning Unfavorable | −0.51 | +0.00 | ▶ −0.35 | | 11 | Information Technology
XLK | | −0.48 | Leaning Unfavorable | −0.40 | −0.59 | ▶ −0.36 |
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 | | +0.00 |
Seven districts noted growth, four were mixed and St. Louis slowed noticeably; manufacturing declined in most of the nation. | Labor markets still tight but more than half the districts noted easing, with falling demand for manufacturing, construction and IT workers. | | Inflation Pressure (higher = headwind) | | +0.00 |
Energy and natural gas prices higher nearly everywhere, but price pressures for most other products have not increased and January retail prices were discounted. | Lending lackluster except mortgage refinancing; six districts reported tighter standards, though lower rates boosted refinancing and some loan demand in Richmond. | Philadelphia expects gradual improvement in the second half and Richmond retailers are more optimistic, but Cleveland metal formers, Chicago and Kansas City manufacturers expect little improvement soon. |
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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 | −1 | · | −2 | · | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | +1 | | FinancialsXLF | · | · | −1 | · | · | −1 | −1 | −1 | · | −1 | −1 | −1 | | Consumer DiscretionaryXLY | −1 | +1 | · | · | −1 | · | · | · | +1 | −1 | · | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | −1 | · | | IndustrialsXLI | +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 | +1 | · | | MaterialsXLB | · | · | · | −1 | · | −1 | −1 | −1 | −1 | · | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Information Technology −2 Dallas High-tech firms reported a sharp drop in consumer and business demand. Why it matters: Dallas carries 10% of IT; the only -2 this release. | Industrials −1 broad−based Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas Manufacturing activity decreased in all Districts except Boston and Richmond. Why it matters: Broad weakness keeps Industrials near the bottom. | Real Estate +1 New York, Richmond, Chicago, Minneapolis, Dallas Home building and sales picked up as mortgage rates fell. Why it matters: Lifts Real Estate to one of the strongest sectors. | Financials −1 broad−based Seven districts Bank lending, other than refinancing, was lackluster; standards tightened. Why it matters: Seven negatives make Financials one of the weakest sectors. | Energy +1 Minneapolis, Kansas City, Dallas U.S. rig count peaking around 1,200 working rigs. Why it matters: Keeps Energy ahead, though no +2 this time. | Information Technology −1 Chicago, Atlanta, St. Louis, Minneapolis Sharp drop-off in orders at a large high-tech producer; layoffs and closings. Why it matters: Spreads tech weakness beyond Dallas. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▼ Slowing but growth continues. |
| New York Growing +1.0 Outlook ▲ Generally favorable, moderate pace. |
| Philadelphia Flat Outlook ▲ Business conditions were mixed. |
| Cleveland Flat Outlook ▼ Remains weak overall, but mixed. |
| Richmond Flat Outlook ▲ Generally remained sluggish. |
| Atlanta Flat Outlook ▲ Only tepid growth. |
| Chicago Flat Outlook ▼ Remained slow, mainly manufacturing. |
| St. Louis Contracting −1.0 Outlook ▲ Slowed noticeably. |
| Minneapolis Flat Economic activity is mixed. |
| Kansas City Flat Outlook ▶ Remained sluggish. |
| Dallas Flat Outlook ▶ Decelerated slightly. |
| San Francisco Growing +1.0 More modest growth. |
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Where the signal is thin or split Divergences to watch | Information Technology — San Francisco reads 0 (mixed) while Dallas is -2, so weighted IT is less negative than the five negative districts suggest.
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| | Industrials — Boston's +1 is the first positive Industrials read since mid-2000; still seven districts negative.
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| | Real Estate — improves on lower mortgage rates, with five +1s against one -1.
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| | Consumer Staples — first non-zero Staples reads in several releases, from food manufacturing; thin coverage.
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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 |