| Sector prospects from the Fed’s regional reports | |
EconomyxAI · Beige Book Sector Monitor January 1997Released January 22, 1997 · Data through January 13 | | | Conditions index +0.42 avg of 11 sectors, −2 to +2 |
| Outlook index +0.65 sectors with an outlook |
| Districts growing 11/12 per National Summary |
| Positive momentum 0/11 sectors improving |
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| This release in brief The read | ■ | Growth was moderate in most districts, with San Francisco reporting strong expansion and Kansas City showing a few signs of slowing. | | ■ | Holiday sales rose by small to moderate amounts and mostly met plans; apparel led, electronics and computers disappointed, and auto sales were slightly downbeat. | | ■ | Manufacturing held steady or expanded, led by steel and metals, machine tools, capital equipment, aerospace and a semiconductor recovery; petroleum producers ran near capacity on high prices. | | ■ | Commercial real estate was almost uniformly tight and residential markets stable or improving; bank lending was active but growth was limited, with some consumer credit deterioration. | | ■ | Labor markets were tight with scattered wage pressure for skilled workers, but price pressure was moderate apart from sharply rising energy costs. |
| Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▶ No history | +1.00 |
| Real Estate
XLRE
▶ No history | +0.74 |
| Consumer Discretionary
XLY
▶ No history | +0.66 |
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| Weakest prospects Financials
XLF
▶ No history | −0.17 |
| Utilities
XLU
▶ No history | +0.00 |
| Health Care
XLV
▶ No history | +0.02 |
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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 | | +1.00 | Favorable | +0.86 | +1.00 | ▶ – | | 2 | Real Estate
XLRE | | +0.74 | Favorable | +0.73 | +0.78 | ▶ – | | 3 | Consumer Discretionary
XLY | | +0.66 | Favorable | +0.66 | +0.74 | ▶ – | | 4 | Information Technology
XLK | | +0.59 | Favorable | +0.68 | n/a | ▶ – | | 5 | Industrials
XLI | | +0.57 | Favorable | +0.76 | +0.61 | ▶ – | | 6 | Materials
XLB | | +0.50 | Favorable | +0.55 | +0.61 | ▶ – | | 7 | Communication Services
XLC | | +0.37 | Leaning Favorable | +0.40 | n/a | ▶ – | | 8 | Consumer Staples
XLP | | +0.05 | Neutral | +0.09 | +0.50 | ▶ – | | 9 | Health Care
XLV | | +0.02 | Neutral | +0.00 | n/a | ▶ – | | 10 | Utilities
XLU | | +0.00 | Neutral | +0.00 | n/a | ▶ – | | 11 | Financials
XLF | | −0.17 | Leaning Unfavorable | −0.06 | +0.29 | ▶ – |
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 | | +1.00 |
Growth was moderate in most districts; San Francisco reported continued strong expansion, St. Louis said activity picked up, and only Kansas City noted a few signs of slowing. | Labor markets were tight almost everywhere, with excess demand for skilled manufacturing and technical workers and Chicago and Richmond reporting rising wage pressure; wage gains stayed at 2 to 4 percent. | | Inflation Pressure (higher = headwind) | | +0.50 |
Price pressure was moderate overall: raw materials stable in New York, Philadelphia, Cleveland and Minneapolis, but energy costs rose sharply and Richmond and Dallas saw more widespread increases. | Loan markets were active but growth limited; New York and Richmond saw weaker demand after an uptick in rates, some banks tightened consumer standards, while Cleveland, St. Louis, Kansas City and San Francisco grew. | Contacts expect continued moderate growth in 1997: San Francisco respondents see GDP growing 2 to 2.5 percent, over 80 percent of Minneapolis poll respondents are optimistic, and Philadelphia manufacturers expect improvement; St. Louis small businesses were less upbeat. |
| 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 | +1 | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | −1 | · | +1 | −1 | · | · | +1 | · | +1 | · | +1 | | Consumer DiscretionaryXLY | +1 | +1 | +1 | · | +1 | +1 | · | +1 | · | · | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | · | +1 | +1 | +1 | · | · | +1 | +1 | +1 | · | · | +2 | | Consumer StaplesXLP | · | · | · | · | · | · | · | +1 | +1 | · | · | · | | EnergyXLE | · | · | · | · | · | · | · | · | +1 | −1 | +2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | · | · | +1 | +1 | +1 | +1 | +1 | −1 | · | +1 | | MaterialsXLB | −1 | · | · | +1 | · | · | +1 | +1 | · | · | +1 | +1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
| Top highlights What moved the scores Energy +2, outlook +1 Dallas Oil services at full capacity; rig count at the year's high; refineries running flat out. Why it matters: Dallas carries 45% of Energy weight, so this +2 dominates the national Energy score. | Industrials +2 San Francisco Manufacturing growth particularly strong on an aerospace resurgence and high-tech expansions. Why it matters: San Francisco is 17% of Industrials and the only +2; it lifts the weighted score well above the average. | Information Technology +1 broad San Francisco, Dallas, Boston Semiconductor firms recovering from a weak 1996; computer shipments picked up. Why it matters: San Francisco (47%) and Dallas (10%) together carry most IT weight. | Industrials outlook +1 Boston, Philadelphia, Minneapolis, San Francisco Half of Boston manufacturers have aggressive capex plans; Philadelphia expects rising orders. Why it matters: Forward-looking: broad positive manufacturing outlook supports the Industrials outlook component. | Real Estate +1 broad eight districts Commercial real estate markets were almost uniformly tight. Why it matters: Broad-based positive reads across high-weight New York, Atlanta and San Francisco. | Financials −1 New York, Richmond Rate uptick brought home loan demand 'to a screeching halt'. Why it matters: New York carries 28% of Financials weight, pulling the weighted score below the unweighted average. |
| Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Expanding at a moderate pace; modest retail growth expected. |
| New York Growing +1.0 Slightly firmer tone; price pressures subdued. |
| Philadelphia Growing +1.0 Outlook ▲ Moving up slowly; manufacturers expect improvement. |
| Cleveland Flat Holding steady at a good level. |
| Richmond Growing +1.0 Outlook ▲ High level, but growth moderated. |
| Atlanta Growing +1.0 Outlook ▲ Growing at a moderate pace; tourism strong. |
| Chicago Growing +1.0 Continued to increase moderately; wage pressure rising. |
| St. Louis Growing +1.0 Outlook ▶ Activity picked up since the last report. |
| Minneapolis Growing +1.0 Outlook ▲ Growing moderately; construction booming. |
| Kansas City Growing +1.0 Outlook ▶ Grew moderately, with a few signs of slowing. |
| Dallas Growing +1.0 Outlook ▲ Expanding at a slightly stronger pace. |
| San Francisco Growing +2.0 Outlook ▲ Continued strong expansion in most states. |
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| Where the signal is thin or split Divergences to watch | Industrials — San Francisco's +2 at 17% weight lifts weighted Industrials above the unweighted average; seven of twelve districts are positive.
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| | Energy — Dallas +2 carries 45% of Energy weight, so the weighted score is far above the unweighted average, which only three districts cover.
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| | Information Technology — five +1 reads including San Francisco (47%), so weighted IT is well above the unweighted average.
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| | Communication Services — a single San Francisco +1 at 40% weight gives a positive weighted score on very thin coverage.
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| | HEALTH CARE and UTILITIES: no coverage in this release, so both read as neutral by default.
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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 |
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