EconomyxAI · Sector Watch February 2011Released March 2, 2011 |
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Conditions index +0.41 avg of 11 sectors, −2 to +2 |
| Outlook index +0.54 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released March 2, 2011, with information collected on or before February 18, 2011. | | ■ | Activity expanded at a modest to moderate pace in January and early February; Kansas City and San Francisco expanded further, Minneapolis and Dallas grew moderately. | | ■ | Manufacturing production grew solidly in every district except St. Louis, with faster order growth in Philadelphia, Atlanta, Chicago, Kansas City and San Francisco. | | ■ | Retail sales rose in all districts but Richmond and Atlanta despite winter storms; housing stayed low while commercial real estate showed signs of traction. | | ■ | Input costs rose widely and manufacturers had more ability to pass them through; labor markets improved modestly with little wage pressure. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.50 |
| Information Technology
XLK
▶ Steady | +0.46 |
| Materials
XLB
▶ Steady | +0.42 |
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| Weakest prospects Real Estate
XLRE
▲ Improving | +0.08 |
| Utilities
XLU
▶ Steady | +0.20 |
| Communication Services
XLC
▶ Steady | +0.23 |
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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 | | +0.50 | Favorable | +1.05 | +0.71 | ▶ −0.10 | | 2 | Information Technology
XLK | | +0.46 | Leaning Favorable | +0.72 | +0.54 | ▶ +0.12 | | 3 | Materials
XLB | | +0.42 | Leaning Favorable | +0.40 | +0.54 | ▶ −0.07 | | 4 | Consumer Discretionary
XLY | | +0.40 | Leaning Favorable | +0.72 | +0.80 | ▼ −0.21 | | 5 | Financials
XLF | | +0.39 | Leaning Favorable | +0.62 | +0.49 | ▲ +0.40 | | 6 | Energy
XLE | | +0.34 | Leaning Favorable | +0.87 | +0.44 | ▼ −0.33 | | 7 | Health Care
XLV | | +0.28 | Leaning Favorable | +0.21 | +0.50 | ▶ +0.10 | | 8 | Consumer Staples
XLP | | +0.24 | Leaning Favorable | +0.31 | +0.55 | ▶ +0.17 | | 9 | Communication Services
XLC | | +0.23 | Leaning Favorable | +0.04 | +0.50 | ▶ +0.01 | | 10 | Utilities
XLU | | +0.20 | Leaning Favorable | +0.00 | +0.50 | ▶ +0.00 | | 11 | Real Estate
XLRE | | +0.08 | Neutral | −0.47 | +0.35 | ▲ +0.53 |
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 |
Modest to moderate expansion; Kansas City and San Francisco expanded further. | All districts reported some improvement; more permanent placements; staffing demand up. | | Inflation Pressure (higher = headwind) | | +0.75 |
Non-wage input costs up widely; more manufacturers passing through; retailers planning increases. | Loan demand mixed; standards unchanged to tighter; credit quality steady to improving. | Optimistic outlooks for manufacturing, retail and autos. |
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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 | +2 | · | +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 | −1 | +1 | +1 | | Communication ServicesXLC | · | · | +1 | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +2 | +1 | +1 | +2 | +1 | −1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | +1 | +1 | | EnergyXLE | · | · | · | · | · | · | · | +1 | · | +2 | +1 | +1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | · | −1 | −1 | +1 | −1 | · | −1 | −1 | · | · | −1 | | MaterialsXLB | · | · | · | +1 | · | · | +1 | −1 | +1 | · | · | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Philadelphia, Atlanta Strong increases in shipments and new orders. Why it matters: Two +2 reads atop broad +1s across 11 districts. | Information Technology +2 Boston Software and IT services revenue mostly up double digits. Why it matters: Raises IT well above neutral alongside San Francisco +1. | Energy +2 Kansas City Energy sector expanded further; hiring and production up. Why it matters: Kansas City is Energy's third-largest weight. | Energy +1 Dallas Drilling remains strong; rig growth shifting to oil. Why it matters: Dallas carries 45% of Energy weight. | Consumer Discretionary +1 broad−based Most districts Retail sales strengthened from a year ago in all but two districts. Why it matters: Breadth supports Discretionary. | Consumer Discretionary −1 Kansas City Severe winter storms limited sales; visitor counts down. Why it matters: Only negative Discretionary read. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Improving economic conditions. |
| New York Growing +0.5 Outlook ▲ Expanded at a modest pace. |
| Philadelphia Growing +1.0 Outlook ▲ Improved overall. |
| Cleveland Growing +0.5 Outlook ▲ Continued to expand at a modest pace. |
| Richmond Growing +0.5 Outlook ▲ Modest improvement across most sectors. |
| Atlanta Growing +0.5 Outlook ▲ Continued to improve at a modest pace. |
| Chicago Growing +0.5 Outlook ▲ Increased, but less strongly than before. |
| St. Louis Growing +0.5 Outlook ▲ Expanded modestly. |
| Minneapolis Growing +1.0 Outlook ▲ Continued to grow moderately. |
| Kansas City Growing +1.0 Outlook ▲ Expanded further. |
| Dallas Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| San Francisco Growing +1.0 Outlook ▲ Posted further gains. |
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Where the signal is thin or split Divergences to watch | Information Technology — Boston +2 and San Francisco +1 lift the weighted score despite Kansas City's softer IT services.
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| | Real Estate — commercial traction in several districts pulls the sector up toward neutral.
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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 |