EconomyxAI · Beige Book Sector Monitor February 2003Released March 5, 2003 |
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Conditions index −0.04 avg of 11 sectors, −2 to +2 |
| Outlook index +0.01 sectors with an outlook |
| Districts growing 2/12 per National Summary |
| Positive momentum 8/11 sectors improving |
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This release in brief The read | ■ | Released March 5, 2003, with information collected before February 24, 2003. | | ■ | Growth stayed subdued in January and February; Richmond 'grew modestly' and Kansas City saw 'some signs of strengthening', while New York said its economy had 'generally weakened.' | | ■ | Geopolitical and economic uncertainty constrained consumer and business spending; capital spending and hiring plans were little changed. | | ■ | Housing stayed strong in nearly all districts and commercial real estate weak; half the districts reported some manufacturing improvement. | | ■ | Sharply higher energy and insurance costs hit manufacturers and shippers, but competition kept final prices in check. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Turning up | +0.26 |
| Health Care
XLV
▶ Steady | +0.08 |
| Materials
XLB
▶ Steady | +0.07 |
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| Weakest prospects Consumer Discretionary
XLY
▶ Steady | −0.26 |
| Industrials
XLI
▶ Steady | −0.15 |
| Real Estate
XLRE
▶ Steady | −0.08 |
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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 | | +0.26 | Leaning Favorable | +0.30 | +0.10 | ▲ +0.22 | | 2 | Health Care
XLV | | +0.08 | Neutral | +0.18 | +0.00 | ▶ −0.07 | | 3 | Materials
XLB | | +0.07 | Neutral | −0.05 | +0.00 | ▶ +0.18 | | 4 | Consumer Staples
XLP | | +0.04 | Neutral | +0.11 | +0.00 | ▶ +0.09 | | 5 | Utilities
XLU | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 6 | Communication Services
XLC | | −0.03 | Neutral | +0.00 | +0.00 | ▲ +0.20 | | 7 | Information Technology
XLK | | −0.04 | Neutral | −0.01 | −0.07 | ▼ +0.04 | | 8 | Financials
XLF | | −0.05 | Neutral | −0.04 | +0.00 | ▶ −0.12 | | 9 | Real Estate
XLRE | | −0.08 | Neutral | −0.10 | −0.05 | ▶ +0.18 | | 10 | Industrials
XLI | | −0.15 | Neutral | −0.25 | +0.07 | ▶ +0.08 | | 11 | Consumer Discretionary
XLY | | −0.26 | Leaning Unfavorable | −0.60 | +0.05 | ▶ +0.02 |
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 |
Activity remained subdued with few notable changes; two districts improved, New York weakened. | Businesses very cautious about hiring; nearly half of districts report manufacturing payroll cuts; staffing demand soft. | | Inflation Pressure (higher = headwind) | | +0.50 |
Significantly higher energy costs raised raw materials, transport and fuel surcharges; record February gasoline prices; little pass-through to final prices. | Very strong mortgage and refinancing demand; business lending weak; one-third of districts tightened standards on some business loans. | Geopolitical and economic uncertainties tempering near-term expectations; few expect near-term commercial real estate improvement. |
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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 | · | | Health CareXLV | +1 | · | · | · | · | +1 | · | · | · | · | · | · | | FinancialsXLF | · | −1 | · | · | · | +1 | · | · | · | · | · | +1 | | Consumer DiscretionaryXLY | −1 | −1 | −1 | · | · | · | −1 | · | · | +1 | −1 | −1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | · | · | · | +1 | · | · | −1 | · | +1 | −1 | −1 | | Consumer StaplesXLP | · | · | · | · | · | · | +1 | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | · | +1 | · | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | · | · | · | +1 | · | · | · | · | · | −1 | · | | 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 broad−based Broad-based Retail sales below plan; storm hit February sales. Why it matters: Six districts negative. | Financials −1 New York Securities industry conditions deteriorated noticeably. Why it matters: Largest Financials weight. | Industrials −1 San Francisco, Boston, Dallas, St. Louis Manufacturing weak; aircraft soft; airlines in a tailspin. Why it matters: Industrials drag. | Industrials +1 Richmond, Kansas City Shipments and new orders rose. Why it matters: Partial offset. | Information Technology −1 Boston, Chicago Software demand declining; upgrades deferred. Why it matters: IT negative tilt. | Information Technology +1 Dallas High-tech sales slight pickup; replacement cycle. Why it matters: Partial offset. |
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Twelve Fed districts District roundup Boston Contracting −0.5 Outlook ▼ Few signs of improvement. |
| New York Contracting −0.5 Outlook ▶ Generally softened. |
| Philadelphia Flat Outlook ▲ Virtually steady. |
| Cleveland Flat Outlook ▶ Remained mixed. |
| Richmond Growing +0.5 Outlook ▶ Grew modestly. |
| Atlanta Contracting −0.5 Outlook ▼ Remained lackluster. |
| Chicago Contracting −0.5 Outlook ▶ Remained soft. |
| St. Louis Contracting −0.5 Outlook ▶ Lackluster. |
| Minneapolis Flat Outlook ▶ Mixed. |
| Kansas City Growing +0.5 Outlook ▲ Some signs of strengthening. |
| Dallas Contracting −0.5 Outlook ▼ Signs of inertia. |
| San Francisco Contracting −0.5 Outlook ▼ Continued sluggish growth. |
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Where the signal is thin or split Divergences to watch | Financials — New York's -1 carries a large weight, so weighted Financials falls below the simple average despite two positive districts.
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| | Industrials — San Francisco and Boston negatives outweigh Richmond and Kansas City gains in weighted terms.
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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 |