EconomyxAI · Sector Watch February 2018Released March 7, 2018 |
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Conditions index +0.34 avg of 11 sectors, −2 to +2 |
| Outlook index +0.32 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Released March 7, 2018, with information collected on or before February 26, 2018. | | ■ | Activity expanded at a modest to moderate pace across all twelve districts; tourism broadly solid and robust in Atlanta and Richmond. | | ■ | Non-auto retail rose in just over half the districts while auto sales declined or were flat everywhere; manufacturing growth broad based. | | ■ | Home sales and construction grew modestly; nonresidential real estate improved moderately; loan volumes flat; employment grew moderately and prices rose in all districts. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.54 |
| Real Estate
XLRE
▶ Steady | +0.52 |
| Energy
XLE
▼ Turning down | +0.46 |
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| Weakest prospects Consumer Staples
XLP
▶ Steady | −0.03 |
| Utilities
XLU
▶ Steady | +0.00 |
| Health Care
XLV
▶ Steady | +0.00 |
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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 | | +0.54 | Favorable | +1.07 | +0.57 | ▶ −0.03 | | 2 | Real Estate
XLRE | | +0.52 | Favorable | +0.97 | +0.50 | ▶ +0.17 | | 3 | Energy
XLE | | +0.46 | Leaning Favorable | +0.71 | +0.53 | ▼ +0.10 | | 4 | Materials
XLB | | +0.40 | Leaning Favorable | +0.35 | +0.50 | ▶ +0.01 | | 5 | Information Technology
XLK | | +0.27 | Leaning Favorable | +0.49 | +0.50 | ▶ −0.36 | | 6 | Financials
XLF | | +0.18 | Leaning Favorable | +0.06 | +0.50 | ▶ −0.17 | | 7 | Consumer Discretionary
XLY | | +0.04 | Neutral | +0.14 | +0.44 | ▼ −0.64 | | 8 | Communication Services
XLC | | +0.02 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 9 | Health Care
XLV | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 10 | Utilities
XLU | | +0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Consumer Staples
XLP | | −0.03 | Neutral | +0.00 | +0.00 | ▶ −0.11 |
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 | | +0.50 |
Modest to moderate expansion across all twelve districts. | Employment grew moderately; wage growth picked up to moderate in many districts. | | Inflation Pressure (higher = headwind) | | +0.75 |
Prices rose in all districts, mostly moderate; steel prices up markedly in four districts. | Loan volumes generally flat; delinquencies down in a handful of districts. | Outlooks positive; tax cuts enabling investment and pay increases in places. |
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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 | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | · | · | +1 | · | · | −1 | +1 | · | · | +1 | · | | Consumer DiscretionaryXLY | +1 | · | · | +1 | +1 | +1 | −1 | · | +1 | +1 | −1 | · | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | +1 | +1 | +1 | +1 | +1 | +1 | · | +1 | +1 | +2 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | +1 | · | −1 | +2 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | · | · | +1 | +1 | +1 | · | · | · | +1 | +1 | +2 | | MaterialsXLB | · | · | · | · | · | · | +1 | +1 | +1 | · | +1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Dallas Manufacturing continued to expand robustly. Why it matters: Strong Industrials read. | Industrials +1 broad−based Broad-based Production increases broad based across manufacturing. Why it matters: Industrials positive in eleven districts. | Real Estate +2 San Francisco Residential strong; commercial real estate robust. Why it matters: SF carries large Real Estate weight. | Energy +1 Dallas Rig count rose; Permian completions picked up. Why it matters: Dallas carries the largest Energy weight. | Energy +2 Minneapolis Energy and mining increased briskly. Why it matters: Strong Energy read. | Information Technology +1 San Francisco Strong microchip demand boosted production. Why it matters: SF carries 47% of IT weight. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| New York Growing +0.5 Outlook ▲ Grew at a modest pace. |
| Philadelphia Growing +0.5 Outlook ▲ Continued at a modest pace. |
| Cleveland Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| Atlanta Growing +0.5 Outlook ▲ Continued to expand modestly. |
| Chicago Growing +1.0 Outlook ▲ Remained at a moderate pace. |
| St. Louis Growing +0.5 Outlook ▲ Improved at a modest pace. |
| Minneapolis Growing +1.0 Outlook ▲ Grew moderately. |
| Kansas City Growing +0.5 Outlook ▲ Increased at a modest pace. |
| Dallas Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| San Francisco Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
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Where the signal is thin or split Divergences to watch | Energy — Dallas +1 plus Minneapolis +2 lift weighted Energy despite St. Louis coal declines.
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| | Consumer Discretionary — Dallas -1 offsets several +1 tourism and retail reads.
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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 |