EconomyxAI · Sector Watch February 2021Released March 3, 2021 |
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Conditions index +0.24 avg of 11 sectors, −2 to +2 |
| Outlook index +0.41 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | Released March 3, 2021, with information collected on or before February 22, 2021. | | ■ | Economic activity expanded modestly in most districts; New York declined modestly and St. Louis was unchanged. | | ■ | Manufacturing rose moderately despite supply chain disruptions; housing demand robust; leisure and hospitality still restrained. | | ■ | Input costs rose moderately with steel and lumber up notably; energy ticked up; businesses optimistic on vaccines. |
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Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▶ Steady | +0.54 |
| Energy
XLE
▼ Turning down | +0.42 |
| Industrials
XLI
▶ Steady | +0.40 |
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| Weakest prospects Communication Services
XLC
▼ Turning down | −0.26 |
| Utilities
XLU
▶ Steady | −0.00 |
| Consumer Staples
XLP
▶ Steady | +0.10 |
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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 | Real Estate
XLRE | | +0.54 | Favorable | +1.04 | +0.50 | ▶ +0.22 | | 2 | Energy
XLE | | +0.42 | Leaning Favorable | +0.67 | +0.50 | ▼ −0.02 | | 3 | Industrials
XLI | | +0.40 | Leaning Favorable | +0.98 | +0.50 | ▶ +0.04 | | 4 | Consumer Discretionary
XLY | | +0.37 | Leaning Favorable | +0.14 | +1.00 | ▲ +0.10 | | 5 | Health Care
XLV | | +0.34 | Leaning Favorable | +0.33 | +0.50 | ▶ +0.23 | | 6 | Information Technology
XLK | | +0.21 | Leaning Favorable | +0.17 | +0.50 | ▼ −0.24 | | 7 | Materials
XLB | | +0.19 | Leaning Favorable | −0.16 | +0.50 | ▶ −0.40 | | 8 | Financials
XLF | | +0.10 | Neutral | −0.19 | +0.50 | ▼ −0.26 | | 9 | Consumer Staples
XLP | | +0.10 | Neutral | +0.22 | +0.00 | ▶ +0.22 | | 10 | Utilities
XLU | | −0.00 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 11 | Communication Services
XLC | | −0.26 | Leaning Unfavorable | −0.55 | +0.00 | ▼ −0.55 |
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 |
Most districts expanded modestly; New York declined and St. Louis was flat. | Employment rose slowly; labor shortages for low-skill and trade positions. | | Inflation Pressure (higher = headwind) | | +1.00 |
Input costs rose moderately with steel and lumber up notably. | Some districts saw loan declines; delinquencies lower and deposits elevated. | Most businesses optimistic for the next 6-12 months as vaccines spread. |
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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 | +1 | · | · | · | · | · | · | · | · | +1 | · | +1 | | FinancialsXLF | · | −1 | −1 | +1 | · | · | · | −1 | · | +1 | −1 | +1 | | Consumer DiscretionaryXLY | · | −1 | +1 | · | · | +1 | +1 | −1 | +1 | · | · | · | | Communication ServicesXLC | · | −1 | · | · | · | · | · | · | · | · | · | −1 | | IndustrialsXLI | +2 | · | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | +1 | | EnergyXLE | · | · | · | · | · | +1 | · | · | +1 | +1 | +1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | +1 | +1 | +1 | +1 | · | +1 | +1 | +1 | +2 | +1 | | MaterialsXLB | · | · | · | · | · | · | · | · | +1 | · | · | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +2 Boston Manufacturers reported strong to very strong results. Why it matters: Strongest Industrials read. | Industrials +1 broad−based Broad-based Manufacturing increased moderately in most districts. Why it matters: Broad Industrials support. | Real Estate +2 Dallas Builders capped sales; lot supply very tight. Why it matters: Large Real Estate weight. | Real Estate +1 broad−based Broad-based Low mortgage rates spurred robust housing demand. Why it matters: Real Estate positive nearly everywhere. | Energy +1 Dallas, Kansas City Energy activity improved further. Why it matters: Largest Energy weights. | Financials +1 San Francisco Lending grew robustly on second-round PPP. Why it matters: Large Financials weight. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Mixed; strong manufacturing, weak hospitality. |
| New York Contracting −1.0 Outlook ▲ Declined modestly; service sector weak. |
| Philadelphia Growing +0.5 Outlook ▲ Rebounded to modest growth. |
| Cleveland Growing +0.5 Outlook ▲ Economy regained momentum. |
| Richmond Growing +0.5 Outlook ▲ Continued to grow modestly. |
| Atlanta Growing +0.5 Outlook ▲ Expanded modestly. |
| Chicago Growing +0.5 Outlook ▲ Increased modestly. |
| St. Louis Flat Outlook ▲ Generally unchanged. |
| Minneapolis Growing +0.5 Outlook ▲ Increased modestly. |
| Kansas City Growing +0.5 Outlook ▲ Expanded slightly. |
| Dallas Growing +1.0 Outlook ▲ Expanded at a moderate pace. |
| San Francisco Growing +0.5 Outlook ▲ Expanded at a modest pace. |
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Where the signal is thin or split Divergences to watch | Industrials — broad +1 readings plus Boston +2 put Industrials near the top in both weighted and unweighted terms.
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| | Real Estate — Dallas +2 and a large SF weight keep the weighted score above the unweighted average.
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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 |