EconomyxAI · Sector Watch February 2004Released March 3, 2004 |
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Conditions index +0.50 avg of 11 sectors, −2 to +2 |
| Outlook index +0.35 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 8/11 sectors improving |
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This release in brief The read | ■ | Released March 3, 2004, with information collected before February 23, 2004. | | ■ | Activity continued to expand in January and February: moderate in seven districts, firm in Minneapolis, sound in San Francisco, and showing signs of accelerating in New York, Richmond and Dallas. | | ■ | General merchandise sales rose in every district except St. Louis, while auto sales slowed in most districts; tourism and services expanded. | | ■ | Manufacturing output rose in 11 of 12 districts (Cleveland steady), with gains in electronics, semiconductors, steel, heavy trucks and lumber. | | ■ | Employment grew slowly and lending grew moderately; retail prices were level to slightly higher while steel, iron ore, scrap and building material prices rose noticeably. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.75 |
| Materials
XLB
▲ Turning up | +0.58 |
| Consumer Discretionary
XLY
▶ Steady | +0.51 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.01 |
| Utilities
XLU
▶ Steady | +0.01 |
| Health Care
XLV
▶ Steady | +0.13 |
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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 | | +0.75 | Favorable | +1.21 | +1.07 | ▶ +0.19 | | 2 | Materials
XLB | | +0.58 | Favorable | +0.64 | +0.54 | ▲ +0.26 | | 3 | Consumer Discretionary
XLY | | +0.51 | Favorable | +1.02 | +0.50 | ▶ +0.23 | | 4 | Information Technology
XLK | | +0.50 | Leaning Favorable | +0.66 | +0.73 | ▶ +0.01 | | 5 | Financials
XLF | | +0.42 | Leaning Favorable | +0.58 | +0.50 | ▶ +0.14 | | 6 | Real Estate
XLRE | | +0.29 | Leaning Favorable | +0.49 | +0.47 | ▶ −0.14 | | 7 | Energy
XLE | | +0.24 | Leaning Favorable | +0.26 | +0.05 | ▶ +0.16 | | 8 | Communication Services
XLC | | +0.18 | Leaning Favorable | +0.40 | +0.00 | ▶ +0.20 | | 9 | Health Care
XLV | | +0.13 | Neutral | +0.29 | +0.00 | ▶ +0.00 | | 10 | Utilities
XLU | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Consumer Staples
XLP | | −0.01 | Neutral | +0.00 | +0.00 | ▶ +0.00 |
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 | | +0.75 |
Continued expansion, moderate in most districts and accelerating in New York, Richmond and Dallas. | Employment growing slowly in most districts with rising temp demand; wages moderate. | | Inflation Pressure (higher = headwind) | | +0.50 |
Retail prices level to modestly higher; accelerating increases for steel, iron ore, scrap, lumber; shipping charges rising. | Bank lending grew moderately; business lending rising in four districts; mortgage lending mixed. | Builders and agents expect 2004 home sales near the 2003 record; ongoing broad expansion. |
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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 | | FinancialsXLF | · | +1 | +1 | · | · | · | +1 | · | · | · | · | +1 | | Consumer DiscretionaryXLY | +1 | +2 | +1 | +1 | +1 | +1 | +1 | −1 | +1 | +1 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | +1 | +2 | +1 | +1 | +1 | +1 | +2 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | +2 | · | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −1 | +1 | +1 | · | +1 | · | · | +1 | · | · | · | +1 | | MaterialsXLB | · | · | · | +2 | · | +1 | +2 | · | +1 | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Chicago, New York Strongest steel boom in 30 years; widespread strong manufacturing gains. Why it matters: High Industrials weights. | Industrials +1 broad−based Broad-based Manufacturing rose in the other ten districts. Why it matters: Broad Industrials strength. | Materials +2 Cleveland, Chicago Steel demand surged; prices accelerating. Why it matters: Concentrated Materials strength. | Consumer Discretionary +2 New York Strong retail sales. Why it matters: Large Discretionary weight. | Consumer Discretionary +1 broad−based Broad-based Retail up moderately in most districts. Why it matters: Discretionary positive. | Energy +2 Kansas City Rig counts up 30 percent from a year earlier. Why it matters: Energy positive. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Continued to improve. |
| New York Growing +1.5 Outlook ▲ Increasingly robust. |
| Philadelphia Growing +1.0 Outlook ▲ Expanded further. |
| Cleveland Growing +0.5 Outlook ▲ Improving slowly. |
| Richmond Growing +1.5 Outlook ▲ Activity quickened. |
| Atlanta Growing +1.0 Outlook ▲ Continued to expand. |
| Chicago Growing +1.0 Outlook ▲ Picked up. |
| St. Louis Growing +0.5 Outlook ▲ Expanding slowly. |
| Minneapolis Growing +1.0 Outlook ▲ Firm growth. |
| Kansas City Growing +1.0 Outlook ▲ Continued to grow. |
| Dallas Growing +1.5 Outlook ▲ Accelerating. |
| San Francisco Growing +1.0 Outlook ▲ Expanded soundly. |
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Where the signal is thin or split Divergences to watch | Industrials — all twelve districts positive with New York and Chicago at +2 lifts the weighted score above +1.
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| | Materials — Cleveland and Chicago's +2 steel readings concentrate a strong Materials signal in the Midwest.
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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 |