EconomyxAI · Sector Watch January 1999Released January 20, 1999 · Data through January 11 |
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Conditions index +0.14 avg of 11 sectors, −2 to +2 |
| Outlook index +0.02 sectors with an outlook |
| Districts growing 12/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | Most regions showed solid growth overall despite weak results in some sectors. | | ■ | New York, Philadelphia and Richmond reported a pickup, while Boston, Atlanta, Cleveland, Kansas City and San Francisco saw slower growth in at least some sectors. | | ■ | Holiday retail sales grew moderately with a late surge on heavy discounting; durables, home goods, electronics and autos were strong everywhere. | | ■ | Residential construction skipped its usual December slowdown, with record existing-home sales in parts of Boston, New York and Chicago. | | ■ | Energy and mining worsened, with U.S. rig counts near post-World War II lows and oil, adjusted for inflation, the cheapest since the Great Depression. |
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Sector prospects Where the 3–12 month view points Strongest prospects Information Technology
XLK
▲ Turning up | +0.54 |
| Real Estate
XLRE
▶ Steady | +0.48 |
| Consumer Discretionary
XLY
▶ Steady | +0.30 |
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| Weakest prospects | Materials
XLB
▶ Steady | −0.24 |
| Communication Services
XLC
▼ Weakening | −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 | Information Technology
XLK | | +0.54 | Favorable | +0.59 | +1.00 | ▲ +0.82 | | 2 | Real Estate
XLRE | | +0.48 | Leaning Favorable | +1.19 | +0.17 | ▶ +0.14 | | 3 | Consumer Discretionary
XLY | | +0.30 | Leaning Favorable | +0.93 | −0.05 | ▶ +0.30 | | 4 | Health Care
XLV | | +0.28 | Leaning Favorable | +0.29 | n/a | ▲ +0.23 | | 5 | Industrials
XLI | | +0.21 | Leaning Favorable | −0.06 | +0.64 | ▶ −0.01 | | 6 | Financials
XLF | | +0.14 | Neutral | +0.38 | n/a | ▼ +0.00 | | 7 | Utilities
XLU | | +0.02 | Neutral | +0.00 | n/a | ▶ +0.00 | | 8 | Consumer Staples
XLP | | +0.01 | Neutral | +0.00 | n/a | ▶ +0.00 | | 9 | Communication Services
XLC | | −0.10 | Neutral | +0.00 | n/a | ▼ −0.43 | | 10 | Materials
XLB | | −0.24 | Leaning Unfavorable | −0.47 | −0.65 | ▶ +0.11 | | 11 | Energy
XLE | | −0.91 | Unfavorable | −1.30 | −1.00 | ▶ −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 |
Most regions showed solid growth overall; New York, Philadelphia and Richmond picked up while five districts slowed in some sectors. | All districts reported tightness, with heightened wage pressure in Atlanta, Chicago and Richmond and more 'poaching' in St. Louis, though Kansas City, Boston and San Francisco said some extreme shortages eased. | | Inflation Pressure (higher = headwind) | | −0.25 |
Producer and consumer prices stable or declining in most districts; steel, paper and petroleum prices under intense pressure, with home prices, service fees and some construction materials the exceptions. | Commercial loan demand mixed but healthy in Atlanta, Chicago and St. Louis, mortgage demand strong almost everywhere; Philadelphia, San Francisco and New York tightened standards. | Contacts in most districts were optimistic about 1999, especially the first half, with Philadelphia and Atlanta expecting acceleration, but most expect slower growth than in 1998. |
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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 | | Health CareXLV | +1 | · | · | · | · | · | · | · | · | · | · | +1 | | FinancialsXLF | +1 | · | +1 | · | +1 | +1 | +1 | +1 | · | · | · | · | | Consumer DiscretionaryXLY | · | +1 | +1 | +2 | +1 | · | +1 | · | +2 | +2 | +1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | −1 | +1 | +1 | · | −1 | +1 | +1 | +1 | −1 | · | −1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | −1 | · | −1 | −2 | −2 | −2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +2 | +2 | +1 | +2 | +1 | · | +2 | +1 | +2 | +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 Information Technology +1 San Francisco Demand for PCs and medical equipment picked up, clearing inventories. Why it matters: San Francisco is about 47% of IT; turning +1 from -1 is the largest single swing this release. | Energy −2 Dallas Drilling 'in a free fall'; rig count near the post-war low of 596. Why it matters: Dallas carries the largest Energy weight. | Energy −2 Kansas City, Minneapolis Oil cheapest since the Great Depression in real terms; Montana rigs at half. Why it matters: Two more -2s make Energy uniformly weak. | Information Technology +1 Dallas Telecom hardware and software demand very strong; Y2K stimulating business demand. Why it matters: Dallas is a top-three IT district; adds to the IT rebound. | Real Estate +2 broad−based Boston, New York, Cleveland, Chicago, Minneapolis New Jersey builders' 'best month ever'; Massachusetts record home sales. Why it matters: Five +2 reads keep Real Estate the strongest sector. | Consumer Discretionary +2 Cleveland, Minneapolis, Kansas City Holiday sales 'very brisk'; light vehicle sales strongest in 12 years. Why it matters: Three +2s lift Discretionary despite Atlanta and St. Louis at 0. |
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Twelve Fed districts District roundup Boston Growing +1.0 Real estate strong; manufacturers expect gains. |
| New York Growing +1.0 Growth picked up further. |
| Philadelphia Growing +1.0 Outlook ▲ Activity moving up as the new year began. |
| Cleveland Growing +1.0 Outlook ▲ Continues to grow; industry moderated in a few. |
| Richmond Growing +1.0 Outlook ▲ Expanded at a faster pace. |
| Atlanta Growing +1.0 Outlook ▲ Healthy and balanced expansion. |
| Chicago Growing +1.0 Modest expansion, little change in momentum. |
| St. Louis Growing +1.0 Outlook ▲ Growth continues at a moderate pace. |
| Minneapolis Growing +2.0 Outlook ▲ Economy is strong as 1999 begins. |
| Kansas City Growing +1.0 Grew moderately; widespread signs of easing. |
| Dallas Growing +1.0 Outlook ▶ Expanded at roughly the same pace. |
| San Francisco Growing +1.0 Outlook ▼ Solid but tempered expansion. |
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Where the signal is thin or split Divergences to watch | Energy — three districts at -2 make this the weakest Energy reading in the series; weighted and unweighted agree.
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| | Information Technology — San Francisco and Dallas both turn +1, lifting weighted IT well above the unweighted average.
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| | Real Estate — five +2 reads; Atlanta the only 0.
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| | Industrials — split, with four +1s and four -1s.
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| | UTILITIES, COMMUNICATION SERVICES and CONSUMER STAPLES: no directional coverage.
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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 |