EconomyxAI · Sector Watch January 2002Released January 16, 2002 |
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Conditions index −0.32 avg of 11 sectors, −2 to +2 |
| Outlook index +0.06 sectors with an outlook |
| Districts growing 0/12 per National Summary |
| Positive momentum 8/11 sectors improving |
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This release in brief The read | ■ | Released January 16, 2002, with information collected before January 9. | | ■ | Activity generally remained weak, with scattered signs of improvement: Cleveland is bottoming out, New York shows further signs of rebounding, while Dallas and San Francisco report continued declines. | | ■ | Many districts expect a recovery to begin by mid-year, though the timing and strength are uncertain and firms are budgeting conservatively. | | ■ | Retail sales picked up around Christmas after heavy discounting; housing held up while commercial real estate kept weakening. | | ■ | Drilling contracted rapidly on lower energy prices, airlines suffered from weak demand and security costs, and wages and prices were flat to falling apart from insurance and health care. |
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Sector prospects Where the 3–12 month view points Strongest prospects Financials
XLF
▲ Improving | +0.19 |
| Communication Services
XLC
▲ Turning up | +0.15 |
| Health Care
XLV
▶ Steady | +0.13 |
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| Weakest prospects | Consumer Discretionary
XLY
▶ Steady | −0.25 |
| Industrials
XLI
▶ Steady | −0.19 |
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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 | Financials
XLF | | +0.19 | Leaning Favorable | −0.14 | +0.40 | ▲ +0.49 | | 2 | Communication Services
XLC | | +0.15 | Neutral | +0.00 | n/a | ▲ +0.43 | | 3 | Health Care
XLV | | +0.13 | Neutral | +0.18 | n/a | ▶ +0.13 | | 4 | Information Technology
XLK | | +0.08 | Neutral | −0.10 | +0.00 | ▲ +0.68 | | 5 | Utilities
XLU | | −0.01 | Neutral | +0.00 | n/a | ▶ +0.00 | | 6 | Consumer Staples
XLP | | −0.07 | Neutral | +0.00 | n/a | ▶ −0.21 | | 7 | Materials
XLB | | −0.09 | Neutral | −0.30 | −0.17 | ▲ +0.42 | | 8 | Real Estate
XLRE | | −0.11 | Neutral | −0.38 | +0.50 | ▶ +0.44 | | 9 | Industrials
XLI | | −0.19 | Leaning Unfavorable | −0.86 | +0.25 | ▶ +0.24 | | 10 | Consumer Discretionary
XLY | | −0.25 | Leaning Unfavorable | −0.64 | −0.22 | ▶ +0.47 | | 11 | Energy
XLE | | −0.65 | Unfavorable | −1.32 | −0.32 | ▶ −0.43 |
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 |
Activity generally remained weak, but with scattered reports of improvement; only Dallas and San Francisco report continued declines. | Labor markets soft with shrinking wage and benefit packages, but Chicago and New York say conditions are stabilizing. | | Inflation Pressure (higher = headwind) | | −0.75 |
Most districts report declining prices for goods and services; exceptions are security, health care and insurance. | Slight softening at financial institutions; higher mortgage rates choked off refinancing; standards tightened in four districts; only Philadelphia reports rising loan volume. | Many districts' contacts expect recovery by mid-year and manufacturers are more optimistic, though uncertainty keeps first-quarter budgets conservative. |
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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 | · | · | · | · | · | · | | FinancialsXLF | +1 | · | +1 | · | −1 | · | · | · | −1 | −1 | · | −1 | | Consumer DiscretionaryXLY | −1 | · | · | · | −1 | −1 | −1 | · | · | +1 | −1 | −1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | −1 | · | −1 | · | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −1 | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | · | · | · | −1 | · | · | −1 | −1 | −2 | −1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | · | · | +1 | · | · | · | · | · | −1 | −1 | −1 | | MaterialsXLB | · | · | −1 | · | −1 | · | · | · | −1 | · | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy −2 Dallas U.S. rig count fell from over 1,000 in early November to 887 at year-end; 2002 capex down about 20 percent. Why it matters: Dallas holds the dominant Energy weight; a -2 makes Energy the weakest sector. | Industrials −1 broad−based Ten districts Manufacturing activity was weak or down in nearly all districts; airline revenues 15-20 percent below last year. Why it matters: Breadth across heavy-weight districts keeps Industrials negative despite stabilization signs. | Health Care +1 Boston, Atlanta Demand increased for biotech products and medical devices; hospitals hiring aggressively with signing bonuses. Why it matters: Two positive readings lift Health Care to the top of the ranking. | Financials +1 Boston, Philadelphia P&C insurance rates up 15-20 percent; Philadelphia bank loans rose in all major categories. Why it matters: Positive readings offset weakness elsewhere and keep Financials near neutral. | Consumer Discretionary −1 Chicago, Atlanta, Dallas, San Francisco Holiday sales 'soft', 'mediocre', 'weak' and 'lackluster' despite heavy discounting. Why it matters: Large districts negative pull the weighted Discretionary score below zero. | Real Estate −1 Dallas, San Francisco, Kansas City Commercial real estate conditions deteriorated further, damping construction; Denver office surplus problematic. Why it matters: Western commercial weakness in heavy-weight districts drives Real Estate negative. |
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Twelve Fed districts District roundup Boston Contracting −1.0 Outlook ▶ Remains slow but some brighter spots visible. |
| New York Flat Outlook ▲ Further signs of rebounding since last report. |
| Philadelphia Contracting −1.0 Outlook ▶ Conditions remained slow; a few positive signs. |
| Cleveland Flat Outlook ▲ Economy still in the process of bottoming out. |
| Richmond Flat Outlook ▲ Activity mixed; services up, manufacturing and retail down. |
| Atlanta Flat Conditions mixed; housing solid, commercial weak. |
| Chicago Contracting −1.0 Outlook ▶ Activity again soft; scattered improvement. |
| St. Louis Contracting −1.0 Activity weak, particularly in manufacturing. |
| Minneapolis Flat Outlook ▼ Activity somewhat mixed in recent months. |
| Kansas City Contracting −1.0 Outlook ▶ Economy remained relatively weak. |
| Dallas Contracting −1.0 Outlook ▲ Activity continued to decline, but outlook more upbeat. |
| San Francisco Contracting −1.0 Activity continued to contract slightly. |
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Where the signal is thin or split Divergences to watch | Energy — Dallas at -2 and most of the remaining weight negative, so Energy is the weakest weighted sector despite many districts not reporting.
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| | Financials — Positive Boston and Philadelphia offset by negative Richmond, Minneapolis, Kansas City and San Francisco; New York at 0 keeps the weighted score close to neutral.
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| | Communication Services & Utilities — Barely discussed; scored 0 throughout. Telecom product weakness scored under IT.
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| | District validation: New York's rebound narrative supported by neutral sector scores; Kansas City overall -1 despite a positive retail reading.
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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 |